Firstly: I am by no means a specialist in financial matters. So this is my strictly amateur investigation into what is going on. There may be, therefore, errors in what I have posted below. I am also not sure about a few things, but for brevity I will not mention those few things for now. Let's start, then. When an organization acquires hundreds of billions of pounds of government debt, that is obviously something very important and may have implications for all of us. I had, therefore, been intending for a while to take a look into the Bank of England's (BoE's) Asset Purchase Facility (APF) through which quantitative easing (QE) is accomplished. This post contains some of the information I have discovered and perhaps you would find it interesting to discuss what it means. The BoE's introductory remarks on the APF: "In January 2009, the Chancellor of the Exchequer authorised the Bank to set up an Asset Purchase Facility (APF) to buy high-quality assets financed by the issue of Treasury bills and the DMO’s cash management operations. The aim of the Facility was to improve liquidity in credit markets." In simple language, the BoE's APF buys government debt (gilts) and now holds about £374 billion of that debt. The aggregate holdings are, apparently, listed in this Excel format document. From which: Code: GB00B29WRG55 UKT_4.5_070313 6110.7 GB0008921883 UKT_8_270913 1556.9 GB00B3KJDW09 UKT_2.25_070314 8232. GB0031829509 UKT_5_070914 12716.4 GB00B4LFZR36 UKT_2.75_220115 4084. GB0033280339 UKT_4.75_070915 15092.5 GB0008881541 UKT_8_071215 4715.9 GB00B3QCG246 UKT_2_220116 7980.9 GB00B0V3WX43 UKT_4_070916 11042.1 GB00B3Z3K594 UKT_1.75_220117 11155.8 GB0008931148 UKT_8.75_250817 4537.5 GB00B7F9S958 UKT_1_070917 3306.1 GB00B1VWPC84 UKT_5_070318 15516. GB00B8KP6M44 UKT_1.25_220718 416.2 GB00B39R3F84 UKT_4.5_070319 16879.9 GB00B4YRFP41 UKT_3.75_070919 11264.7 GB00B058DQ55 UKT_4.75_070320 13139. GB00B582JV65 UKT_3.75_070920 3866. GB0009997999 UKT_8_070621 11284.8 GB00B4RMG977 UKT_3.75_070921 6702.9 GB00B3KJDQ49 UKT_4_070322 23080.8 GB00B7L9SL19 UKT_1.75_070922 2172.1 GB0030880693 UKT_5_070325 16300.7 GB00B16NNR78 UKT_4.25_071227 16441.6 GB0002404191 UKT_6_071228 7725.5 GB00B24FF097 UKT_4.75_071230 11627.3 GB0004893086 UKT_4.25_070632 14099.8 GB00B52WS153 UKT_4.5_070934 7483.2 GB0032452392 UKT_4.25_070336 5565.4 GB00B00NY175 UKT_4.75_071238 7993.8 GB00B3KJDS62 UKT_4.25_070939 6141.4 GB00B6460505 UKT_4.25_071240 7280.7 GB00B1VWPJ53 UKT_4.5_071242 7021.2 GB00B84Z9V04 UKT_3.25_220144 628. GB00B128DP45 UKT_4.25_071246 4793.7 GB00B39R3707 UKT_4.25_071249 4990.1 GB00B6RNH572 UKT_3.75_220752 6031.2 GB00B06YGN05 UKT_4.25_071255 8099.6 GB00B54QLM75 UKT_4_220160 7099.6 GB00BBJNQY21 UKT_3.5_220768 26.8 In that table the first column contains the ISIN (International Securities Identification Number). The second column contains a string of the form "X_Y_Z". X is always "UKT" = UK Treasury? Y is the coupon rate of the gilt. Z is the maturity date. A time series of BoE gilt purchases can be found here. If those are the current holdings of the BoE, then the government would be expected to transfer coupon payments to the BoE (i.e., pay interest on their debt). But actually, the BoE is giving the money straight back to the government: "Since 2009 the Bank of England has operated QE by buying gilts and holding them in a dedicated facility called the Asset Purchase Facility (APF). These gilts attract regular coupon payments from the Exchequer. […] From now on this excess cash will be transferred to the Exchequer on a regular basis. […] These changes will end the current arrangement which requires the Government to borrow money to fund coupon payments to the Bank of England. Holding large amounts of cash in the APF is economically inefficient as it requires the Government to borrow money to fund these coupon payments." According to the BBC: "This is likely to reduce the government's budget deficit by about £11bn a year" But it's not necessarily "free money": "At some point in the future, as monetary conditions normalise, it is likely that the cash flows will need to be reversed. Return payments from the Government to the APF may be necessary to meet shortfalls in the APF’s net income as the Bank Rate rises, or capital losses on its gilt holdings as the Monetary Policy Committee unwinds QE. The previous Government agreed that any future losses incurred by the APF will be met in full by the Government. For this reason, any net coupon income transferred from the APF to the Exchequer should be used solely to pay down government debt." Again, quoted from here. Summary: The government borrows money by issuing gilts. The gilts attract coupon payments. The goverment makes those payments to the Bank of England. The Bank of England then gives the money back to the government. The government then uses the money to pay off some of the debt it took on in the first place (intake of breath!). And then, at some future point in time, the government may have to borrow more money to hand back the coupon money to the Bank of England so that the BoE does not make a loss when it asks the government to pay the BoE the gilt redemption value (assuming the gilts have not been sold to a third party). Does that need a diagram? There's some discussion of the difficulties involved in the Financial Times. Finally, it is interesting to note that the APF holdings in the table above include gilts that have already reached their maturity date (last year). What is going to happen to those now? Cheers.