LONDON (AFX) - The Bank of England will cease to publish data on MO, one of
the main money supply targets of the Conservative government in the early 1980s.
M0, which comprises notes and coins in circulation as well as bankers'
operational balances at the central bank, will become a victim of the reforms to
the Bank's money market operations, scheduled for March-June 2006.
"Following the implementation of the planned reforms to money market
operations, bankers' balances are likely to increase greatly in size and be
subject to very different influences from those driving notes and coins,"
Charlie Bean, the BoE's chief economist, said in the central bank's quarterly
bulletin.
"The Bank is therefore proposing to discontinue the publication of an
aggregate M0 series and instead publish separate series for notes and coins in
circulation, and reserves of banks and building societies held with the Bank,"
he added.
In the late 1970s, UK counter-inflationary policy placed greater weight on
measures of aggregate money than before, evidenced by the publication of annual
intermediate targets for money supply growth.
The Conservative government elected in 1979 initially maintained targets for
broad money growth, but influenced by academic economists, it also considered
monetary base control, or M0, as an alternative technique to achieve its
objective of reducing inflation.
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