According to the latest figures from the Debt Management Office (Q2 2011), the total market value of central government liabilities was £ 1.1 trillion of which approximately £200 billion is index linked and the balance conventional gilts.

At the end of 2008, the level of gilts outstanding was just over £600 billion, in three years the total level of liabilities has almost doubled. So who has bought all of the gilts?

The Bank of England has purchased the equivalent of over 50% of the new debt issued by the debt management office in the three year period. According to the QE theory, the Bank purchases assets predominantly from non-banks but in fact all stakeholders in the gilt market have increased their holdings over the same period.

The Bank of England has completed the “large scale asset purchases” not from banks and non banks but from the Debt Management Office in a process of monetizing the central government debt burden. Read more down load the Special Feature. The Saturday Economist Special Feature – who bought all the gilts?