This Guardian editorial argues that the Bank of England's programme of quantitative tightening (QT) has landed the Treasury with a bill that could reach £120bn, exposing a flaw in the 1997 settlement that made the Bank independent. That arrangement assumed monetary policy (set by the Bank) and fiscal policy (set by the Treasury) could be neatly separated, but QT means an unelected monetary policy committee now makes decisions with major consequences for public spending, while ministers alone are accountable to voters for the fallout.

The editorial explains that losses arise because the Bank is selling gilts, bought during quantitative easing, at prices below what it paid, because the Asset Purchase Facility's £500bn of bonds earn less than the base-rate "loan" used to buy them, and because gilts purchased above face value are booked as losses at maturity. The Treasury paid the Bank £17bn last year alone under an uncapped indemnity dating from 2009, which George Osborne turned into a "quarterly cash machine" in 2012 when the Treasury profited by £124bn during the low-rate years; that mechanism has since reversed. The Guardian argues no other major central bank operates this way, and that quiet Bank-Treasury coordination on QT changes should be replaced by ending the indemnity and making the arrangement properly accountable.