Assets sold to the bank by commercial banks

Dear Bank of England,

Could you tell me if the Bank of England holds any assets sold to
them by private commercial banks and if they do could you tell me
what makes up most of these assets.

Secondly I would like to know whether each time a commercial bank
makes a loan to a customer, that banks reserves with the Bank of
England go up? Otherwise, how does the commercial bank obtain all
the banknotes needed to provide the customers with the facility of
being able to withdraw their deposits that were created through the
loans?

Yours faithfully,

Matthew Cooper

Dear Enquiries,

Thanks for your reply.

I will clarify my question for you.

It is my understanding that for transactions to take place between
commercial banks they must have reserve accounts at the BoE and for
example when a cheque is drawn the reserve account of the payor's
bank is debited and the reserve account of the payee's is credited
by the BoE. These transactions are offset on the commercial banks
books by debiting the payor's bank account and crediting the
payee's account respectively.

It is also my understanding that these reserves with the BoE can be
exchanged for bank notes and that is how the banks get notes to put
in their ATMs.

MY QUESTION is this: How do the commercial banks get their BoE
reserve accounts increased in order to have more banknotes and
reserves to leverage to cover depositors demands for notes and
credit? Do these banks sell assets to the BoE in exchange for
credits to their reserve accounts?

Yours sincerely,

Matthew Cooper

Dear Enquiries,

You have not replied within the time period allowed by the Freedom
of Information Act.

If you do not reply within five days, I will take your silence to
be an acceptance that commercial banks sell loan documents to BoE
in exchange for credit to their accounts

Yours sincerely,

Matthew Cooper

Dear Bank of England,

This is a notice of fault and opportunity to cure. You have not
replied within the time period set forth by the FOI act and the
additional time period expressed by me in the previous post, and I
said that failure to respond by today, 5 days from the previous
post, would constitute acceptance that the commercial banks sell
loan documents to the BoE in exchange for credits to their reserve
accounts with the bank.

I am going to give the BoE another THREE DAYS to respond, if they
have any argument against the fact put forth above. Failure to
respond in this time period WILL constitute acceptance and
admittance that the BoE buys loan documents from commercial banks
in exchange for credits to said banks reserve accounts.

Yours faithfully,

Matthew Cooper

Dear Enquiries,

You seem to not be answering my question directly - it is my
understanding that for loan customers to withdraw money or transfer
it by cheque or direct debit, the commercial bank must have central
bank money or base money available to clear transactions and enable
depositors to withdraw money.

I understand that one of the BoE's jobs is to ensure that there is
enough central bank money available for transactions to take place.

However, in order to obtain new central bank money, do commercial
banks ever sell loan securities to the BoE?

Yours sincerely,

Matthew Cooper

Dear Enquiries,

Thank you very much for your help. It is my understanding that when
banks sell securities to the BoE the BoE buys them by crediting
their reserve accounts, and these securities are paid for with
money that didn't previously exist, therefore adding new central
bank money to the economy. The booklet 'Quantitative Easing
Explained' describes how new money is added to the economy in this
way: by purchases of securities.

Yours sincerely,

Matthew Cooper