Part III UK Derivatives, Money, and Debt Markets, 10 UK Government Debt Management and the Gilt Market

Abstract

This chapter provides an overview of the UK Debt Management Office (DMO) that was established on 1 April 1998 and was tasked to manage government wholesale sterling debt issuance, which was originally the Bank of England's responsibility. It highlights the DMO's purpose on carrying out the government's debt management policy of minimising financing costs over the long term and minimising cost to offset the government's net cash flows while operating in a risk appetite approved by Ministers. It also points out that the DMO, in institutional terms, is legally and constitutionally part of HM Treasury (HMT) as an executive agency. This chapter discusses the gilt market, which is comprised of two different types of securities: conventional gilts and index—linked gilts. It compares the different types of gilt and shows how the breakdown of the gilt market has changed over time.