Tim W was raggin' on Ritchie again today, and in order to try and disprove what Ritchie had claimed, linked to a publication by KPMG which stated: "Over the 12 months to June 2009, banks increased their aggregate holdings in gilts from a slight negative holding to £120 billion."
Because I know about these things, I left a comment saying that this was clearly wildly overstated, but have now done the requisite digging in order to satisfy my blogger's honour (or publish a humble retraction).
i. A table in a BBC article titled Who owns the UK's debt shows that "Banks, including Bank of England" owned about £185 billion of UK gilts as at 30 September 2009.
ii. The Bank of England's balance sheet in turn shows that it has lent £199 billion to a subsidiary to buy up gilts (which is the usual figure bandied about, but it's always best to check these things - it's in Note 13 on page 65 of their balance sheet as at 28 February 2010). Quite what happened to the missing £14 billion (£199 billion minus £185 billion) is a separate topic, but that suggests very strongly to me that the Bank of England owns all £185 billion
iii. Therefore it's reasonable to assume that commercial banks own not one penn'orth of gilts - why would they? The whole point of QE was to enable commercial banks to sell gilts at a profit and leave the proceeds on deposit with the Bank of England (the same accounts show deposits from commercial banks of £169 billion, note 23, page 77).
iv. I can forgive Tim W for this oversight (he makes the mistake of grabbing any evidence to prove that Ritchie is wrong, even when, occasionally Ritchie is right, or in this instance, Ritchie is wrong but for quite different reasons) but this just shows what a bunch of smug useless twats the leading provider of professional services, which include audit, tax, and advisory can be.
