We present an analysis of X-ray and ultra-violet data of the dwarf nova VW Hyi that were obtained with XMM-Newton during the quiescent state . The X-ray spectrum indicates the presence of an optically thin plasma in the boundary layer that cools as it settles onto the white dwarf . The plasma has a continuous temperature distribution that is well described by a power-law or a cooling flow model with a maximum temperature of 6–8 \ > keV . We estimate from the X-ray spectrum a boundary layer luminosity of 8 \times 10 ^ { 30 } \ > \mathrm { erg\ > s ^ { -1 } } , which is only 20 per cent of the disk luminosity . The rate of accretion onto the white dwarf is 5 \times 10 ^ { -12 } M _ { \odot } \ > yr ^ { -1 } , about half of the rate in the disk . From the high-resolution X-ray spectra , we estimate that the X-ray emitting part of the boundary layer is rotating with a velocity of 540 \ > km \ > s ^ { -1 } , which is close the rotation velocity of the white dwarf but significantly smaller than the Keplerian velocity . We detect a 60-s quasi-periodic oscillation of the X-ray flux that is likely due to the rotation of the boundary layer . The X-ray and the ultra-violet flux show strong variability on a time scale of \sim 1500 s. We find that the variability in the two bands is correlated and that the X-ray fluctuations are delayed by \sim 100 s. The correlation indicates that the variable ultra-violet flux is emitted near the transition region between the disk and the boundary layer and that accretion rate fluctuations in this region are propagated to the X-ray emitting part of the boundary layer within \sim 100 s. An orbital modulation of the X-ray flux suggests that the inner accretion disk is tilted with respect to the orbital plane . The elemental abundances in the boundary layer are close to their solar values .