BoE's Bailey says removing public-sector interest rate risk a key aim of QT

(Adds ‌missing word "a" in paragraph 4)

LONDON, Dec 11 (Reuters) - ‍Bank of ‌England Governor Andrew Bailey said eliminating interest rate ⁠risk from the ‌public sector was a key goal of its efforts to shrink its balance sheet, in an interview ⁠broadcast on Thursday.

Through a process known as quantitative tightening, the ​BoE is unwinding hundreds of billion ‌pounds of reserves that ⁠it created to finance government bond purchases between 2009 and 2021 in efforts to stimulate ​the economy, by allowing those gilts to mature and also by selling them.

This marks a shift toward a model where banks' demand for ​reserves - ‍accessed through the ​BoE's repo lending facilities - determines the level of central bank reserves.

"I think from the point of view of the of the public balance sheets in this country, we should not have interest ⁠rate risk on our balance sheet," Bailey said in a Financial ​Times Global Boardroom interview that took place on November 24.

"So a repo-backed stock of reserves puts the interest rate risk into ‌the private sector, which is where it should be."

(Reporting by David Milliken, Writing by Andy Bruce)