Editing Bank of England (section)

===Asset purchase facility {{Anchor|APF|Asset purchase facility}}===
The bank has operated, since January 2009, an Asset Purchase Facility (APF) to buy "high-quality assets financed by the issue of Treasury bills and the [[Debt Management Office (United Kingdom)|DMO]]'s cash management operations" and thereby improve liquidity in the credit markets.<ref name="APF">{{Cite web |title=Asset Purchase Facility |url=http://www.bankofengland.co.uk/markets/apf/index.htm |url-status=live |archive-url=https://web.archive.org/web/20100726113941/http://www.bankofengland.co.uk/markets/apf/index.htm |archive-date=26 July 2010 |access-date=12 August 2010 |publisher=Bank of England}}</ref> It has, since March 2009, also provided the mechanism by which the bank's policy of [[quantitative easing]] (QE) is achieved, under the auspices of the MPC. Along with managing the QE funds, which were £895 bn at peak, the APF continues to operate its corporate facilities. Both are undertaken by a subsidiary company of the Bank of England, the Bank of England Asset Purchase Facility Fund Limited (BEAPFF).<ref name="APF"/>

QE was primarily designed as an instrument of monetary policy. The mechanism required the Bank of England to purchase government bonds on the secondary market, financed by creating new [[Monetary base|central bank money]]. This would have the effect of increasing the asset prices of the bonds purchased, thereby lowering yields and dampening longer-term interest rates. The policy's aim was initially to ease liquidity constraints in the sterling reserves system but evolved into a wider policy to provide economic stimulus.

QE was enacted in six tranches between 2009 and 2020. At its peak in 2020, the portfolio totalled £895 billion, comprising £875 billion of UK government bonds and £20 billion of high-grade commercial bonds.

In February 2022, the Bank of England announced its intention to commence winding down the QE portfolio.<ref>{{Cite web|url=https://www.bankofengland.co.uk/letter/2022/apf-letters-february-2022|title=Exchange of letters between the Governor and the Chancellor on the Asset Purchase Facility - February 2022|website=www.bankofengland.co.uk|date=23 June 2023 }}</ref> Initially this would be achieved by not replacing tranches of maturing bonds, and would later be accelerated through active bond sales.

In August 2022, the Bank of England reiterated its intention to accelerate the QE wind-down through active bond sales. This policy was affirmed in an exchange of letters between the Bank of England and the UK Chancellor of the Exchequer in September 2022.<ref>{{Cite web|url=https://www.bankofengland.co.uk/letter/2022/september/quantitative-tightening-asset-sales-september-2022|title=Exchange of letters between the Governor and the Chancellor on the Asset Purchase Facility - September 2022|website=www.bankofengland.co.uk|date=23 June 2023 }}</ref> Between February 2022 and September 2022, a total of £37.1bn of government bonds matured, reducing the outstanding stock from £875.0bn at the end of 2021 to £837.9bn. In addition, a total of £1.1bn of corporate bonds matured, reducing the stock from £20.0bn to £18.9bn, with sales of the remaining stock planned to begin on 27 September.