By revisesociology on Skatehive
Banks currently get interest on the reserves they hold at the Bank of England, but Reform's latest policy initiative is to suggest we scrap those payments, saving, they claim, British taxpayers billions of pounds every year. At first glance this sounds like common sense. Banks are sitting on piles of cash at the central bank—so why should taxpayers keep paying them interest? But there are also some possible downsides... The Lure of “Free Money” Reform UK keeps pointing to the huge reserves banks have at the Bank of England. This all traces back to quantitative easing during the financial crises and the pandemic, when the Bank bought up government bonds to keep the economy afloat. That move pumped more than £750 billion into the banking system at its peak. And since the Bank of England pays interest on those reserves, taxpayers pick up the tab. Reform UK’s supporters claim that if the government just stopped these payments, it could unlock a mountain of cash for public services. But Cri