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Millaise

UK Sovereign Debt: in what currencies is it denominated?

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Millaise   

I've been searching for a breakdown of UK government debt, just to reassure myself that it is all in sterling, so we could pay it if we needed to do so.

I came across this "Britain issues first sovereign renminbi bond" , so if we have got to issuing bonds in Chinese currency, have we already done so in US dollars and euros?

Does anyone have this information to hand? And why would our government want to obtain foreign currency in this way?

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RiskArb   

If I remember correctly I think the amount of non-sterling debt is less than 1% of all outstanding debt but I will check tomorrow. The majority is held by domestic UK investors (the treasury itself owns about 25% of the stock, something to do with quantitative easing which I don't fully understand).

The reason the UK government issues very limited debt in foreign currencies is to kick start growth in that particular market and all ancillary services. For example having something to trade in London in RMB might spur Chinese corporates to also issue in RMB and before you know it London will be a hub for RMB fx trading and derivatives clearing. The UK did something similar with an ECU bond issuance to promote the market in ECU and later EUR securities in the early 90s:

http://www.bankofengland.co.uk/archive/Documents/historicpubs/qb/1992/qb92q2180189.pdf

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