(1) The Bank of England must pay interest to an authorised bank on the funds held by the bank in an account designated under regulation 6(2)(c).

(2) If the amount of funds held by the bank in a designated account exceeds the qualifying limit, the Bank of England shall only be required to pay interest on an amount equal to the qualifying limit.

(3) For the purposes of this regulation, the qualifying limit is an amount equal to the total of -

(a) 40% of the value of an authorised bank’s banknotes in circulation; and

(b) the value of the bank’s banknotes with the potential to enter circulation.

(4) Interest shall be -

(a) calculated on a daily basis at the rate paid on commercial bank reserves at the Bank of England; and

(b) credited to the account at the end of such periods as are specified in the rules.