§ The Paymaster General (Dawn Primarolo)
Cash Ratio Deposits (CRDs) are non-interest bearing assets deposited with the Bank of England by banks and building societies. They are used by the Bank to finance its unremunerated activities, in particular its efforts to secure price stability and the stability of the financial system in general, from which these institutions are key beneficiaries.
The CRD scheme was extended to include building societies, and was placed on a statutory basis, when the Bank of England Act became law in 1998. At the time the Government, in the Treasury's response to consultation (published on 20 April 1998) made a commitment to review the new scheme within five years of its application. The Treasury, working closely with the Bank, will begin that review today.11WS
The review will include an assessment of the detailed arrangements of the scheme as well as the continuing suitability of the scheme itself compared to alternative sources of funding. It will also address the impact of the scheme on the eligible institutions. The review will conclude in May, and we will publish the broad conclusions in a statement to the House shortly afterwards.