Recommendation 4

Quantitative easing was a powerful tool with which to combat a monetary contraction in the aftermath of the 2008 financial crisis, but its continued deployment has blurred the lines between monetary and fiscal policy. While the quantum of quantitative easing is a monetary policy decision, decisions on debt duration have consequences for debt management. In light of the concerns raised about debt duration and the effects of quantitative easing, the Bank and the Debt Management Office (which is an agency of HM Treasury) should draw up and publish a memorandum of understanding which clarifies how the interaction between monetary policy and debt management should operate.