LONDON, Jan 29 (Reuters) - Bank of England Governor Andrew Bailey stated on Wednesday that British banks are planning to hold £400 billion to £500 billion ($496-$620 billion) of reserves with the central bank as it reduces its balance sheet.
The BoE is unwinding a significant amount of reserves - funds generated to purchase government bonds during quantitative easing rounds, transitioning from excess reserves to a level that may drop below market demand equilibrium.
Bank discussions indicate reserves ranging from £400 billion to £500 billion, though these figures are not exact and subject to change, Bailey informed members of the Treasury Committee in parliament.
Bailey indicated the possibility of reserves reaching that level later this year, consistent with previous estimates.
In a publication, Bailey mentioned that the Bank of England anticipates the 'preferred minimum range of reserves' to be between £345 billion and £490 billion.
($1 = 0.8061 pounds)