The Bank of England borrows to fund its own currency reserves
Victoria Shinder2 min readThe Bank of England published a market notice on 21 September 2026 under its Foreign Currency Reserves programme. Two things in it are worth separating, because they are routinely confused.
These are the Bank's own reserves, not the Government's. The notice states that the Bank holds foreign exchange reserves in support of its policy objectives, and that these are separate from the Government's own foreign exchange reserves, which the Bank manages as the Treasury's agent. Two pots, one manager, different owners.
The issuance framework was set a year ago. Pursuant to a market notice of 23 September 2025, the Bank shifted to targeting two benchmark issuances annually to finance those reserves, with a regular timetable, a high degree of transparency, and a group of banks to market and distribute each issue.
The rest of the notice is securities-law furniture, and it tells you who the document is for: distribution is restricted, the target market is eligible counterparties and professionals only across all distribution channels, it is issued in reliance on Rule 135e of the US Securities Act, and the terms themselves live in the prospectus of 9 February 2026 plus final terms still to be published.
What it means
A central bank funding reserves by issuing debt is ordinary, and the structure is the point. Borrowing in foreign currency to hold foreign currency leaves the Bank with matched exposure rather than an open position — the reserves are financed, not bought with sterling.
"Two benchmark issues a year" is a commitment to predictability. For a reserve manager the alternative is opportunistic issuance, which is cheaper on a good day and noisier for everybody else. A published timetable trades a little cost for less market disturbance.
The notice is procedural: the numbers are not in it. Size, currency and pricing appear in the final terms. Anyone reading a market notice for a headline figure is reading the wrong document.