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The Bank of England is the
central bank A central bank, reserve bank, or monetary authority is an institution that manages the currency A currency, "in circulation", from la, currens, -entis, literally meaning "running" or "traversing" in the most specific sense is money ...

central bank
of the
United Kingdom The United Kingdom of Great Britain and Northern Ireland, commonly known as the United Kingdom (UK) or Britain,Usage is mixed. The Guardian' and Telegraph' use Britain as a synonym for the United Kingdom. Some prefer to use Britain as shorth ...

United Kingdom
and the model on which most modern central banks have been based. Established in 1694 to act as the
English Government There has not been a government of England since 1707 when the Kingdom of England ceased to exist as a sovereign state, as it merged with the Kingdom of Scotland to form the Kingdom of Great Britain.
's banker, and still one of the bankers for the
Government of the United Kingdom The Government of the United Kingdom, domestically referred to as Her Majesty's Government, is the central government of the United Kingdom of Great Britain and Northern Ireland.
, it is the world's eighth-oldest bank. It was privately owned by stockholders from its foundation in 1694 until it was nationalised in 1946 by the
Attlee ministry Clement Attlee Clement Richard Attlee, 1st Earl Attlee, (3 January 18838 October 1967) was Prime Minister of the United Kingdom from 1945 to 1951 and Leader of the Labour Party from 1935 to 1955. He was Deputy Prime Minister during the ...
. In 2009, a request made to
HM Treasury Her Majesty's Treasury (HM Treasury), sometimes referred to as the Exchequer, or more informally the Treasury, is the department of the Government of the United Kingdom responsible for developing and executing the government's public finance ...
under the
Freedom of Information ActFreedom of Information Act may refer to the following legislations in different jurisdictions which mandate the national government to disclose certain data to the general public upon request: * Freedom of Information Act 1982, the Australian act * ...
sought details about the 3% Bank of England stock owned by unnamed shareholders whose identity the Bank is not at liberty to disclose. In a letter of reply dated 15 October 2009, HM Treasury explained that. '''Some of the 3% Treasury stock which was used to compensate former owners of Bank stock has not been redeemed. However, interest is paid out twice a year and it is not the case that this has been accumulating and compounding. The Bank became an independent public organisation in 1998, wholly owned by the
Treasury Solicitor , logo_width = 250 The Government Legal Department (previously called the Treasury Solicitor's Department) is the largest in-house legal organisation in the United Kingdom The United Kingdom of Great Britain and Northern Ireland, commonly ...
on behalf of the government, but with independence in setting monetary policy. The Bank is one of eight banks authorised to issue banknotes in the United Kingdom, has a monopoly on the issue of banknotes in
England and Wales England and Wales () is a legal jurisdiction covering England and Wales, two of the four countries of the United Kingdom, parts of the United Kingdom. England and Wales forms the constitutional successor to the former Kingdom of England and follows ...

England and Wales
and regulates the issue of banknotes by commercial banks in
Scotland Scotland ( sco, Scotland, gd, Alba ) is a country that is part of the United Kingdom The United Kingdom of Great Britain and Northern Ireland, commonly known as the United Kingdom (UK) or Britain,Usage is mixed. The Guardian' and Tele ...

Scotland
and
Northern Ireland Northern Ireland ( ga, Tuaisceart Éireann ; sco, label= Ulster-Scots, Norlin Airlann) is a part of the United Kingdom The United Kingdom of Great Britain and Northern Ireland, commonly known as the United Kingdom (UK) or Britain,Usa ...

Northern Ireland
. The Bank's
Monetary Policy CommitteeMonetary Policy Committee (MPC) may refer to: * Monetary Policy Committee (India) of the Reserve Bank of India * Monetary Policy Committee (United Kingdom) The Monetary Policy Committee (MPC) is a committee of the Bank of England, which meets ...
has a devolved responsibility for managing
monetary policy Monetary policy is the policy adopted by the monetary authority In finance and economics, a monetary authority is the entity that manages a country’s currency and money supply, often with the objective of controlling inflation targeting, infla ...

monetary policy
. The Treasury has reserve powers to give orders to the committee "if they are required in the public interest and by extreme economic circumstances", but such orders must be endorsed by Parliament within 28 days. The Bank's
Financial Policy CommitteeThe Financial Policy Committee (FPC) is an official committee of the Bank of England The Bank of England is the central bank A central bank, reserve bank, or monetary authority is an institution that manages the currency and monetary policy ...
held its first meeting in June 2011 as a macroprudential regulator to oversee regulation of the UK's financial sector. The Bank's headquarters have been in London's main financial district, the
City of London The City of London is a City status in the United Kingdom, city, Ceremonial counties of England, ceremonial county and local government district that contains the historic centre and the primary central business district (CBD) of London. It c ...

City of London
, on
Threadneedle Street Threadneedle Street is a street in the City of London The City of London is a City status in the United Kingdom, city, Ceremonial counties of England, ceremonial county and local government district that contains the historic centre and th ...

Threadneedle Street
, since 1734. It is sometimes known as ''The Old Lady of Threadneedle Street'', a name taken from a satirical cartoon by
James Gillray James Gillray (13 August 1756Gillray, James and Draper Hill (1966). ''Fashionable contrasts''. Phaidon. p. 8.Baptism register for Fetter Lane (Moravian) confirms birth as 13 August 1756, baptism 17 August 1756 1June 1815) was a British caricatur ...
in 1797. The road junction outside is known as Bank junction. As a regulator and central bank, the Bank of England has not offered consumer banking services for many years, but it still does manage some public-facing services such as exchanging superseded bank notes. Until 2016, the bank provided personal banking services as a privilege for employees.


History


Founding

England England is a that is part of the . It shares land borders with to its west and to its north. The lies northwest of England and the to the southwest. England is separated from by the to the east and the to the south. The country cover ...

England
's crushing defeat by
France France (), officially the French Republic (french: link=no, République française), is a List of transcontinental countries, transcontinental country spanning Western Europe and Overseas France, overseas regions and territories in the Ame ...
, the dominant naval power, in naval engagements culminating in the 1690 Battle of Beachy Head, became the catalyst for England to rebuild itself as a global power. 's government wanted to build a naval fleet that would rival that of France; however, the ability to construct this fleet was hampered both by a lack of available public funds and the low credit of the English government in London. This lack of credit made it impossible for the English government to borrow the £1,200,000 (at 8% per annum) that it wanted for the construction of the fleet. To induce subscription to the loan, the subscribers were to be
incorporated Incorporated may refer to: * Incorporated community * Incorporated (Grip Inc. album), ''Incorporated'' (Grip Inc. album), 2004, by Grip Inc. * Incorporated (Legion of Doom album), ''Incorporated'' (Legion of Doom album), 2006 * Incorporated (TV seri ...
by the name of the Governor and Company of the Bank of England. The Bank was given exclusive possession of the government's balances, and was the only limited-liability corporation allowed to issue bank notes. The lenders would give the government cash (bullion) and issue notes against the government bonds, which can be lent again. The £1.2 million was raised in 12 days; half of this was used to rebuild the navy. As a side effect, the huge industrial effort needed, including establishing
ironworks An ironworks or iron works is an industrial plant where iron Iron () is a chemical element with Symbol (chemistry), symbol Fe (from la, Wikt:ferrum, ferrum) and atomic number 26. It is a metal that belongs to the first transition series an ...
to make more nails and advances in agriculture feeding the quadrupled strength of the navy, started to transform the economy. This helped the new
Kingdom of Great Britain The Kingdom of Great Britain, officially called Great Britain,"After the political union of England and Scotland in 1707, the nation's official name became 'Great Britain'", ''The American Pageant, Volume 1'', Cengage Learning (2012) was a s ...

Kingdom of Great Britain
England and Scotland were formally united in 1707 – to become powerful. The power of the navy made Britain the dominant world power in the late 18th and early 19th centuries. The establishment of the bank was devised by
Charles Montagu, 1st Earl of Halifax Charles Montagu, 1st Earl of Halifax (16 April 1661 – 19 May 1715) was an English poet A poet is a person who creates poetry. Poets may describe themselves as such or be described as such by others. A poet may simply be a writer of po ...
, in 1694. The plan of 1691, which had been proposed by William Paterson three years before, had not then been acted upon. 58 years earlier, in 1636, Financier to the king, Philip Burlamachi, had proposed exactly the same idea in a letter addressed to
Sir Francis Windebank Sir Francis Windebank (1582 – 1 September 1646) was an English politician who was Secretary of State (England), Secretary of State under Charles I of England, Charles I. Biography Francis was the only son of Sir Thomas Windebank of Hougham, Li ...
. He proposed a loan of £1.2 million to the government; in return the subscribers would be incorporated as The Governor and Company of the Bank of England with long-term banking privileges including the issue of notes. The
royal charter A royal charter is a formal grant issued by a monarch under royal prerogative The royal prerogative is a body of customary authority, privilege, and immunity, recognized in common law and, sometimes, in civil law jurisdictions possessing ...

royal charter
was granted on 27 July through the passage of the Tonnage Act 1694. Public finances were in such dire condition at the time that the terms of the loan were that it was to be serviced at a rate of 8% per annum, and there was also a service charge of £4,000 per annum for the management of the loan. The first governor was Sir
John Houblon Sir John Houblon (13 March 1632 – 10 January 1712) was the first Governor of the Bank of England A governor is, in most cases, a public official with the power to govern the executive branch The executive is the branch of government exer ...

John Houblon
, who is depicted in the £50 note issued in 1994. The charter was renewed in 1742, 1764, and 1781.


18th century

The Bank's original home was in Walbrook, a street in the City of London, where during reconstruction in 1954 archaeologists found the remains of a Roman temple of Mithras (Mithras is – rather fittingly – said to have been worshipped as, amongst other things, the God of Contracts); the Mithraeum ruins are perhaps the most famous of all 20th-century Roman discoveries in the City of London and can be viewed by the public. The Bank moved to its current location in Threadneedle Street in 1734, and thereafter slowly acquired neighbouring land to create the site necessary for erecting the Bank's original home at this location, under the direction of its chief architect Sir
John Soane Sir John Soane (; né Soan; 10 September 1753 – 20 January 1837) was an English architect who specialised in the Neo-Classical style. The son of a bricklayer, he rose to the top of his profession, becoming professor of architecture at the Roy ...
, between 1790 and 1827. (Sir
Herbert Baker Sir Herbert Baker (9 June 1862 – 4 February 1946) was an English architect remembered as the dominant force in South Africa South Africa, officially the Republic of South Africa (RSA), is the southernmost country in Africa. With over De ...
's rebuilding of the Bank in the first half of the 20th century, demolishing most of Soane's masterpiece, was described by architectural historian
Nikolaus Pevsner Sir Nikolaus Bernhard Leon Pevsner (30 January 1902 – 18 August 1983) was a German-British art historian and architectural historian An architectural historian is a person who studies and writes about the history of architecture, and is ...
as "the greatest architectural crime, in the
City of London The City of London is a City status in the United Kingdom, city, Ceremonial counties of England, ceremonial county and local government district that contains the historic centre and the primary central business district (CBD) of London. It c ...

City of London
, of the twentieth century".) When the idea and reality of the
national debt In public finance, government debt, also known as public interest, public debt, national debt and sovereign debt, is the total amount of debt owed at a point in time by a government A government is the system or group of people govern ...
came about during the 18th century, this was also managed by the Bank. During the
American war of independence The American Revolutionary War (1775–1783), also known as the Revolutionary War and the American War of Independence, was initiated by delegates from thirteen American colonies of British America British America comprised the colonia ...
, business for the Bank was so good that
George Washington George Washington (February 22, 1732, 1799) was an American soldier, statesman, and Founding Fathers of the United States, Founding Father who served as the first President of the United States from 1789 to 1797. Appointed by the Continenta ...

George Washington
remained a shareholder throughout the period. By the
charter A charter is the grant of authority In the fields of sociology Sociology is the study of society, human social behaviour, patterns of social relationships, social interaction, and culture that surrounds everyday life. It is a social scien ...
renewal in 1781 it was also the bankers' bank – keeping enough gold to pay its notes on demand until 26 February 1797, when
war War is an intense armed conflict between states State may refer to: Arts, entertainment, and media Literature * ''State Magazine'', a monthly magazine published by the U.S. Department of State * The State (newspaper), ''The State'' (new ...

war
had so diminished
gold reserves A gold reserve was the gold held by a national central bank, intended mainly as a guarantee to redeem promises to pay depositors, note holders (e.g. paper money), or trading peers, during the eras of the gold standard, and also as a store of va ...

gold reserves
that – following an invasion scare caused by the
Battle of Fishguard The Battle of Fishguard was a military invasion of Kingdom of Great Britain, Great Britain by French First Republic, Revolutionary France during the War of the First Coalition. The brief campaign, on 22–24 February 1797, is the most recent la ...
days earlier – the government prohibited the Bank from paying out in gold by the passing of the Bank Restriction Act 1797. This prohibition lasted until 1821.


19th century

In 1825–26, the bank was able to avert a liquidity crisis when
Nathan Mayer Rothschild Nathan Mayer Rothschild (16 September 1777 – 28 July 1836) was a German Jewish banker, businessman and financier. Born in Frankfurt am Main Frankfurt, officially Frankfurt am Main (; Hessian: ''Frangford am Maa'', " Frank ford ...

Nathan Mayer Rothschild
succeeded in supplying it with gold. The 1844 Bank Charter Act tied the issue of notes to the gold reserves and gave the Bank sole rights with regard to the issue of banknotes. Private banks that had previously had that right retained it, provided that their headquarters were outside London and that they deposited security against the notes that they issued. A few English banks continued to issue their own notes until the last of them was taken over in the 1930s. Scottish and Northern Irish private banks still have that right. The bank acted as
lender of last resort headquarters in Washington, D.C. ) , image_skyline = , image_caption = Clockwise from top left: the Washington Monument and Lincoln Memorial on the National Mall The National Mall is a Landscape ar ...
for the first time in the
panic of 1866The Panic of 1866 was an international financial downturn that accompanied the failure of Overend, Gurney and Company Overend, Gurney & Company was a London wholesale Wholesaling or distributing is the sale of goods or merchandise Merchandi ...
. The last private bank in England to issue its own notes was Thomas Fox's Fox, Fowler and Company bank in
Wellington Wellington ( mi, Te Whanganui-a-TaraTe Whanganui-a-Tara is the Māori name for Wellington Harbour. The term is also used to refer to the city of Wellington Wellington ( mi, Te Whanganui-a-Tara ) is the capital city of New Zealand. It i ...
, which rapidly expanded, until it merged with Lloyds Bank in 1927. They were legal tender until 1964. There are nine notes left in circulation; one is housed at ,
Wellington Wellington ( mi, Te Whanganui-a-TaraTe Whanganui-a-Tara is the Māori name for Wellington Harbour. The term is also used to refer to the city of Wellington Wellington ( mi, Te Whanganui-a-Tara ) is the capital city of New Zealand. It i ...
.


20th century

Britain was on the
gold standard Gold certificates were used as paper currency in the United States">paper_currency.html" ;"title="Gold certificates were used as paper currency">Gold certificates were used as paper currency in the United States from 1882 to 1933. These certifi ...
until 1931, when the Bank of England unilaterally and abruptly took Britain off the gold standard. During the governorship of
Montagu Norman Montagu Collet Norman, 1st Baron Norman Distinguished Service Order, DSO Privy Council of the United Kingdom, PC (6 September 1871 – 4 February 1950) was an English banker, best known for his role as the Governor of the Bank of England from 1920 ...
, from 1920 to 1944, the Bank made deliberate efforts to move away from
commercial bank A commercial bank is a financial institution Financial institutions, otherwise known as banking institutions, are corporation A corporation is an organization—usually a group of people or a company—authorized by the State (polity), s ...
ing and become a central bank. In 1946, shortly after the end of Norman's tenure, the bank was nationalised by the
Labour Labour or labor may refer to: * Childbirth Childbirth, also known as labour or delivery, is the ending of pregnancy where one or more babies leaves the uterus by passing through the vagina or by Caesarean section. In 2015, there were about 13 ...
government. The Bank pursued the multiple goals of Keynesian economics after 1945, especially "easy money" and low interest rates to support aggregate demand. It tried to keep a fixed exchange rate, and attempted to deal with inflation and sterling weakness by credit and exchange controls. In 1977, the Bank set up a wholly owned subsidiary called Bank of England Nominees Limited (BOEN), a now defunct private limited company, with two of its hundred £1 shares issued. According to its Memorandum & Articles of Association, its objectives were: "To act as Nominee or agent or attorney either solely or jointly with others, for any person or persons, partnership, company, corporation, government, state, organisation, sovereign, province, authority, or public body, or any group or association of them...." Bank of England Nominees Limited was granted an exemption by
Edmund Dell Edmund Emanuel Dell (15 August 1921 – 1 November 1999) was a British British may refer to: Peoples, culture, and language * British people The British people, or Britons, are the citizens of the United Kingdom of Great Britain and No ...
, Secretary of State for Trade, from the disclosure requirements under Section 27(9) of the Companies Act 1976, because "it was considered undesirable that the disclosure requirements should apply to certain categories of shareholders." The Bank of England is also protected by its
royal charter A royal charter is a formal grant issued by a monarch under royal prerogative The royal prerogative is a body of customary authority, privilege, and immunity, recognized in common law and, sometimes, in civil law jurisdictions possessing ...

royal charter
status, and the
Official Secrets Act An Official Secrets Act (OSA) is legislation that provides for the protection of state secrets and official information, mainly related to national security but in unrevised form (based on the UK OSA 1911) can include all information held by gov ...
. BOEN was a vehicle for governments and heads of state to invest in UK companies (subject to approval from the Secretary of State), providing they undertake "not to influence the affairs of the company". In its later years, BOEN was no longer exempt from company law disclosure requirements. Although a
dormant company A dormant company is a company A company, abbreviated as co., is a Legal personality, legal entity representing an association of people, whether Natural person, natural, Legal personality, legal or a mixture of both, with a specific objective. ...
, dormancy does not preclude a company actively operating as a nominee shareholder. BOEN had two shareholders: the Bank of England, and the Secretary of the Bank of England. The
reserve requirement A reserve requirement is a central bank A central bank, reserve bank, or monetary authority is an institution that manages the currency and monetary policy of a State (polity), state or formal monetary union, and oversees their commercia ...
for banks to hold a minimum fixed proportion of their deposits as reserves at the Bank of England was abolished in 1981: see
reserve requirement A reserve requirement is a central bank A central bank, reserve bank, or monetary authority is an institution that manages the currency and monetary policy of a State (polity), state or formal monetary union, and oversees their commercia ...

reserve requirement
for more details. The contemporary transition from Keynesian economics to Chicago economics was analysed by
Nicholas Kaldor Nicholas Kaldor, Baron Kaldor (12 May 1908 – 30 September 1986), born Káldor Miklós, was a Cambridge Cambridge ( ) is a College town, university city and the county town of Cambridgeshire, England, on the River Cam approximately north of Lo ...

Nicholas Kaldor
in ''The Scourge of Monetarism''. On 6 May 1997, following the
1997 general election1997 general election may refer to: * 1997 Canadian federal election * 1997 Irish general election * 1997 Singaporean general election * 1997 United Kingdom general election {{Disambiguation ...
that brought a Labour government to power for the first time since 1979, it was announced by the Chancellor of the Exchequer,
Gordon Brown James Gordon Brown (born 20 February 1951) is a British politician who served as Prime Minister of the United Kingdom and Leader of the Labour Party (UK), Leader of the Labour Party from 2007 Labour Party leadership election (UK), 2007 to ...

Gordon Brown
, that the Bank would be granted operational independence over monetary policy. Under the terms of the Bank of England Act 1998 (which came into force on 1 June 1998), the Bank's
Monetary Policy CommitteeMonetary Policy Committee (MPC) may refer to: * Monetary Policy Committee (India) of the Reserve Bank of India * Monetary Policy Committee (United Kingdom) The Monetary Policy Committee (MPC) is a committee of the Bank of England, which meets ...
was given sole responsibility for setting interest rates to meet the Government's Retail Prices Index (RPI) inflation target of 2.5%. The target has changed to 2% since the
Consumer Price Index#REDIRECT consumer price index A consumer price index measures changes in the price level of a weighted average market basket of Goods, consumer goods and Services marketing, services purchased by households. A CPI is a statistical estimate con ...
(CPI) replaced the Retail Prices Index as the Treasury's inflation index. If inflation overshoots or undershoots the target by more than 1%, the Governor has to write a letter to the
Chancellor of the Exchequer The chancellor of the Exchequer, often abbreviated to the chancellor, is a senior minister of the Crown within the Government of the United Kingdom, and the chief executive officer of HM Treasury, Her Majesty's Treasury. As one of the four Grea ...
explaining why, and how he will remedy the situation. The success of inflation targeting in the United Kingdom has been attributed to the Bank's focus on transparency. The Bank of England has been a leader in producing innovative ways of communicating information to the public, especially through its Inflation Report, which has been emulated by many other central banks. Independent central banks that adopt an inflation target are known as central banks. This change in Labour's politics was described by Skidelsky in ''The Return of the Master'' as a mistake and as an adoption of the Rational Expectations Hypothesis as promulgated by Walters. Inflation targets combined with central bank independence have been characterised as a "starve the beast" strategy creating a lack of money in the public sector. The handing over of monetary policy to the Bank had been a key plank of the Liberal Democrats' economic policy since the 1992 general election.
Conservative Conservatism is an aesthetic Aesthetics, or esthetics (), is a branch of philosophy that deals with the nature of beauty and taste (sociology), taste, as well as the philosophy of art (its own area of philosophy that comes out of aest ...

Conservative
MP
Nicholas Budgen Nicholas William Budgen (3 November 1937 – 26 October 1998), often called Nick Budgen, was a United Kingdom, British Conservative Party (UK), Conservative Party politician. Early life and career Named after St. Nicholas Church in Newport, Shro ...
had also proposed this as a
private member's bill A private member's bill in a parliamentary system A parliamentary system or parliamentary democracy is a system of democratic Democrat, Democrats, or Democratic may refer to: *A proponent of democracy Democracy ( gr, δημοκρατ ...
in 1996, but the bill failed as it had the support of neither the government nor the opposition.


21st century

Mark Carney Mark Joseph Carney Order of Canada, OC (born 16 March 1965) is a Canadian economist and banker. He is Vice Chairman and Head of Impact Investing at Brookfield Asset Management as of October 2020. He served as the Governor of the Bank of Canada fro ...

Mark Carney
assumed the post of
Governor of the Bank of England The Governor of the Bank of England is the most senior position in the Bank of England The Bank of England is the central bank of the United Kingdom and the model on which most modern central banks have been based. Established in 1694 to act as ...
on 1 July 2013. He succeeded
Mervyn KingMervyn King may refer to: *Mervyn King, Baron King of Lothbury (born 1948), British economist, former governor of the Bank of England *Mervyn King (judge) (born 1937), former judge of the Supreme Court of South Africa and chairman of the King Commit ...
, who took over on 30 June 2003. Carney, a Canadian, was to serve an initial five-year term rather than the typical eight. He became the first Governor not to be a UK citizen, but has since been granted citizenship. At Government request, his term was extended to 2019, then again to 2020. As of January 2014, the Bank also has four
Deputy Governors Deputy is one empowered to act for another. Depute is the historical form of "deputy" and is still used in the Scottish legal system. Deputy or depute may refer to: * Steward (office) * Khalifa, an Arabic title that can signify "deputy" * Deputy ( ...
. BOEN was dissolved, following liquidation, in July 2017.


Functions

Two main areas are tackled by the Bank to ensure it carries out these functions efficiently:


Monetary stability

Note: It is important to note that "monetary" and "financial" are synonyms. Stable prices and confidence in the currency are the two main criteria for monetary stability. Stable prices are maintained by seeking to ensure that price increases meet the Government's inflation target. The Bank aims to meet this target by adjusting the base
interest rate An interest rate is the amount of interest In finance Finance is the study of financial institutions, financial markets and how they operate within the financial system. It is concerned with the creation and management of money and investm ...
, which is decided by the
Monetary Policy CommitteeMonetary Policy Committee (MPC) may refer to: * Monetary Policy Committee (India) of the Reserve Bank of India * Monetary Policy Committee (United Kingdom) The Monetary Policy Committee (MPC) is a committee of the Bank of England, which meets ...
, and through its communications strategy, such as publishing
yield curve In finance Finance is the study of financial institutions, financial markets and how they operate within the financial system. It is concerned with the creation and management of money and investments. Savers and investors have money avai ...

yield curve
s. :Maintaining financial stability involves protecting against threats to the whole financial system. Threats are detected by the Bank's surveillance and
market intelligenceMarket intelligence (MI) is the information relevant to a company's market Market may refer to: *Market (economics) *Market economy *Marketplace, a physical marketplace or public market Geography *Märket, an island shared by Finland and Sweden ...
functions. The threats are then dealt with through financial and other operations, both at home and abroad. In exceptional circumstances, the Bank may act as the
lender of last resort headquarters in Washington, D.C. ) , image_skyline = , image_caption = Clockwise from top left: the Washington Monument and Lincoln Memorial on the National Mall The National Mall is a Landscape ar ...
by extending credit when no other institution will. The Bank works together with other institutions to secure both monetary and financial stability, including: *
HM Treasury Her Majesty's Treasury (HM Treasury), sometimes referred to as the Exchequer, or more informally the Treasury, is the department of the Government of the United Kingdom responsible for developing and executing the government's public finance ...
, the Government department responsible for financial and economic policy; and * Other central banks and international organisations, with the aim of improving the international financial system. The 1997
memorandum of understanding A memorandum of understanding (MoU) is a type of agreement between two (bilateralism, bilateral) or more (multilateralism, multilateral) parties. It expresses a convergence of will between the parties, indicating an intended common line of action ...
describes the terms under which the Bank, the Treasury and the FSA work toward the common aim of increased financial stability. In 2010, the incoming Chancellor announced his intention to merge the FSA back into the Bank. As of 2012, the current director for financial stability is
Andy Haldane Andrew G. Haldane, FAcSSThe Fellowship of the Academy of Social Sciences (FAcSS) is an award granted by the Academy of Social Sciences to leading academics, policy-makers, and practitioners of the social sciences. Fellows were previously known a ...
. The Bank acts as the government's banker, and it maintains the government's
Consolidated Fund In many states with political systems derived from the Westminster system The Westminster system or Westminster model is a type of parliamentary system of government that incorporates a series of Parliamentary procedure, procedures for operati ...
account. It also manages the country's
foreign exchange The foreign exchange market (Forex, FX, or currency market) is a global decentralization, decentralized or Over-the-counter (finance), over-the-counter (OTC) market for the trading of currency, currencies. This market determines Exchange rate ...
and
gold reserves A gold reserve was the gold held by a national central bank, intended mainly as a guarantee to redeem promises to pay depositors, note holders (e.g. paper money), or trading peers, during the eras of the gold standard, and also as a store of va ...

gold reserves
. The Bank also acts as the bankers' bank, especially in its capacity as a lender of last resort. The Bank has a monopoly on the issue of
banknote A banknote (often known as a bill (in the US and Canada), paper money, or simply a note) is a type of negotiable promissory note A promissory note, sometimes referred to as a note payable, is a legal instrument ''Legal instrument'' is a ...
s in England and Wales. Scottish and Northern Irish banks retain the right to issue their own banknotes, but they must be backed one-for-one with deposits at the Bank, excepting a few million pounds representing the value of notes they had in circulation in 1845. The Bank decided to sell its banknote-printing operations to
De La Rue De La Rue plc (, ) is a British company headquartered in Basingstoke Basingstoke ( ) is the largest town in the county of Hampshire. It is situated in south central England, and lies across a valley at the source of the River Loddon at the ...
in December 2002, under the advice of Close Brothers Corporate Finance Ltd. Since 1998, the
Monetary Policy CommitteeMonetary Policy Committee (MPC) may refer to: * Monetary Policy Committee (India) of the Reserve Bank of India * Monetary Policy Committee (United Kingdom) The Monetary Policy Committee (MPC) is a committee of the Bank of England, which meets ...
(MPC) has had the responsibility for setting the official interest rate. However, with the decision to grant the Bank operational independence, responsibility for government debt management was transferred in 1998 to the new Debt Management Office, which also took over government cash management in 2000.
Computershare Computershare Limited is an Australian stock transfer agent, stock transfer company that provides corporate trust, stock transfer and Employee ownership, employee share plan services in a number of different countries. The company currently h ...
took over as the registrar for UK Government bonds (
gilt-edged securities Gilt-edged securities are government bond, bonds issued by the UK Government. The term is of Great Britain, British origin, and then referred to the debt securities issued by the Bank of England on behalf of HM Treasury, His/Her Majesty's Treasury, ...
or ''gilts'') from the Bank at the end of 2004. The Bank used to be responsible for the regulation and supervision of the banking and insurance industries. This responsibility was transferred to the Financial Services Authority in June 1998, but after the financial crises in 2008 new banking legislation transferred the responsibility for regulation and supervision of the banking and insurance industries back to the Bank. In 2011, the interim
Financial Policy CommitteeThe Financial Policy Committee (FPC) is an official committee of the Bank of England The Bank of England is the central bank A central bank, reserve bank, or monetary authority is an institution that manages the currency and monetary policy ...
(FPC) was created as a mirror committee to the MPC to spearhead the Bank's new mandate on financial stability. The FPC is responsible for macro prudential regulation of all UK banks and insurance companies. To help maintain economic stability, the Bank attempts to broaden understanding of its role, both through regular speeches and publications by senior Bank figures, a semiannual Financial Stability Report, and through a wider education strategy aimed at the general public. It currently maintains a free museum and ran the
Target Two Point ZeroTarget Two Point Zero was an interest rate An interest rate is the amount of interest Interest, in finance and economics, is payment from a debtor, borrower or deposit-taking financial institution to a lender or depositor of an amount above repa ...
competition for A-level students, closing in 2017.


Asset purchase facility

The Bank has operated, since January 2009, an Asset Purchase Facility (APF) to buy "high-quality assets financed by the issue of Treasury bills and the DMO's cash management operations" and thereby improve liquidity in the credit markets. It has, since March 2009, also provided the mechanism by which the Bank's policy of
quantitative easing Quantitative easing (QE) is a monetary policy whereby a central bank purchases predetermined amounts of government bonds or other financial assets (e.g., municipal bonds, corporate bonds, stocks, etc.) in order to inject money into the economy to ...
(QE) is achieved, under the auspices of the MPC. Along with the managing the £200 billion of QE funds, the APF continues to operate its corporate facilities. Both are undertaken by a subsidiary company of the Bank of England, the Bank of England Asset Purchase Facility Fund Limited (BEAPFF).


Banknote issues

The Bank has issued banknotes since 1694. Notes were originally hand-written; although they were partially printed from 1725 onwards, cashiers still had to sign each note and make them payable to someone. Notes were fully printed from 1855. Until 1928 all notes were "White Notes", printed in black and with a blank reverse. In the 18th and 19th centuries White Notes were issued in £1 and £2 denominations. During the 20th century White Notes were issued in denominations between £5 and £1000. Until the mid-19th century, commercial banks were allowed to issue their own banknotes, and notes issued by provincial banking companies were commonly in circulation. The
Bank Charter Act 1844 The Bank Charter Act 1844 (7 & 8 Vict. c. 32), sometimes referred to as the Peel Banking Act of 1844, was an Act of the Parliament of the United Kingdom The Parliament of the United Kingdom is the Parliamentary sovereignty in the United K ...
began the process of restricting note issue to the Bank; new banks were prohibited from issuing their own banknotes and existing note-issuing banks were not permitted to expand their issue. As provincial banking companies merged to form larger banks, they lost their right to issue notes, and the English private banknote eventually disappeared, leaving the Bank with a monopoly of note issue in England and Wales. The last private bank to issue its own banknotes in England and Wales was Fox, Fowler and Company in 1921. However, the limitations of the 1844 Act only affected banks in England and Wales, and today three commercial banks in Scotland and four in Northern Ireland continue to issue their own
banknotes A banknote (often known as a bill (in the US and Canada), paper money, or simply a note) is a type of , made by a or other licensed authority, payable to the bearer on demand. Banknotes were originally issued by commercial banks, which wer ...
, regulated by the Bank. At the start of the
First World War World War I, often abbreviated as WWI or WW1, also known as the First World War or the Great War, was a global war A world war is "a war War is an intense armed conflict between states State may refer to: Arts, entertainmen ...
, the Currency and Bank Notes Act 1914 was passed, which granted temporary powers to
HM Treasury Her Majesty's Treasury (HM Treasury), sometimes referred to as the Exchequer, or more informally the Treasury, is the department of the Government of the United Kingdom responsible for developing and executing the government's public finance ...
for issuing banknotes to the values of £1 and 10/- (ten shillings). Treasury notes had full legal tender status and were not convertible into gold through the Bank; they replaced the gold coin in circulation to prevent a run on sterling and to enable raw material purchases for armament production. These notes featured an image of
King George V George V (George Frederick Ernest Albert; 3 June 1865 – 20 January 1936) was King of the United Kingdom There have been 12 monarchy of the United Kingdom, British monarchs since the political union of the Kingdom of England and the K ...

King George V
(Bank of England notes did not begin to display an image of the monarch until 1960). The wording on each note was: Treasury notes were issued until 1928, when the
Currency and Bank Notes Act 1928 The Currency and Bank Notes Act 1928 (18 & 19 Geo. V c.13) is an Act of Parliament, Act of the Parliament of the United Kingdom relating to banknotes. Among other things, it makes it a Crime, criminal offence to deface a banknote. Notes External ...
returned note-issuing powers to the banks. The Bank of England issued notes for ten
shilling The shilling is a historical coin, and the name of a unit of modern currencies A currency, "in circulation", from la, currens, -entis, literally meaning "running" or "traversing" in the most specific sense is money Image:National-De ...
s and one pound for the first time on 22 November 1928. During the Second World War the German
Operation Bernhard Operation Bernhard was an exercise by Nazi Germany Nazi Germany, (lit. "National Socialist State"), ' (lit. "Nazi State") for short; also ' (lit. "National Socialist Germany") officially known as the German Reich. until 1943 and Greater ...
attempted to counterfeit denominations between £5 and £50, producing 500,000 notes each month in 1943. The original plan was to parachute the money into the UK in an attempt to destabilise the British economy, but it was found more useful to use the notes to pay German agents operating throughout Europe. Although most fell into
Allied An alliance is a relationship among people, groups, or sovereign state, states that have joined together for mutual benefit or to achieve some common purpose, whether or not explicit agreement has been worked out among them. Members of an alli ...
hands at the end of the war, forgeries frequently appeared for years afterwards, which led banknote denominations above £5 to be removed from circulation. In 2006, over £53 million in banknotes belonging to the Bank was stolen from a depot in
Tonbridge, Kent Tonbridge ( ) is a market town in Kent, England, on the River Medway, north of Royal Tunbridge Wells, south west of Maidstone and south east of London. In the administrative borough of Tonbridge and Malling, it had an estimated population ...
. Modern banknotes are printed by contract with
De La Rue De La Rue plc (, ) is a British company headquartered in Basingstoke Basingstoke ( ) is the largest town in the county of Hampshire. It is situated in south central England, and lies across a valley at the source of the River Loddon at the ...
Currency in Loughton, Essex.


Gold vault

The bank is custodian to the official gold reserves of the United Kingdom and around 30 other countries. , the bank held around 400,000 bars, which is equivalent to of gold. These gold deposits were estimated in August 2018 to have a current market value of approximately £200 billion. These estimates suggest the vault could hold as much as 3% of the gold mined throughout human history.


Governance of the Bank of England


Governors

Following is a list of the Governors of the Bank of England since the beginning of the 20th century:


Court of Directors

The Court of Directors is a unitary board that is responsible for setting the organisation's strategy and budget and taking key decisions on resourcing and appointments. It consists of five executive members from the Bank plus up to 9 non-executive members, all of whom are appointed by the Crown. The Chancellor selects the Chairman of the Court from among the non-executive members. The Court is required to meet at least 7 times a year. The Governor serves for a period of eight years, the Deputy Governors for five years, and the non-executive members for up to four years.


Other staff

Since 2013, the Bank has had a
chief operating officer A chief operating officer (COO), also called a chief operations officer, is one of the highest-ranking executive positions in an organization, composing part of the " C-suite". The COO is usually the second-in-command {{unreferenced, date=May 200 ...
(COO). , the Bank's COO has been Joanna Place. , the Bank's chief economist is Andrew Haldane.


See also

* List of British currencies *
Bank of England ActBank of England Act is a stock short title used in the United Kingdom for legislation relating to the Bank of England. List *The Bank of England Act 1946 (9 & 10 Geo 6 c 27) *The Bank of England Act 1998 (c 11) The Bank of England Acts 1694 to 1892 ...
* Bank of England club *
Coins of the pound sterling The standard circulating coin A coin is a small, flat, (usually, depending on the country or value) round piece of metal A metal (from Ancient Greek, Greek μέταλλον ''métallon'', "mine, quarry, metal") is a material that, whe ...
*
East India Company The East India Company (EIC), also known as the Honourable East India Company (HEIC), East India Trading Company (EITC), the English East India Company or (after Acts of Union 1707, 1707) the British East India Company, and informally known a ...
shareholders * Financial Sanctions Unit *
Fractional-reserve banking Fractional-reserve banking is the system of banking A bank is a financial institution that accepts Deposit account, deposits from the public and creates a demand deposit while simultaneously making loans. Lending activities can be directl ...
* Commonwealth banknote-issuing institutions *
Bank of England Museum The Bank of England Museum, located within the Bank of England in the City of London, is home to a collection of diverse artifacts detailing the history of the Bank from its foundation in 1694 to present. History Previously, access to the bank' ...
*
Deputy Governor of the Bank of EnglandA Deputy Governor of the Bank of England is the holder of one of a small number of senior positions at the Bank of England The Bank of England is the central bank of the United Kingdom and the model on which most modern central banks have been bas ...
* List of directors of the Bank of England


References


Further reading

* , on nationalisation 1945–50, pp 43–76 * Capie, Forrest. ''The Bank of England: 1950s to 1979'' (Cambridge University Press, 2010). xxviii + 890 pp. 
excerpt and text search
* Clapham, J. H. ''Bank of England'' (2 vol 1944) for 1694–1914 * Fforde, John. ''The Role of the Bank of England, 1941–1958'' (1992
excerpt and text search
* Francis, John. ''History of the Bank of England: Its Times and Traditions'
excerpt and text search
* Hennessy, Elizabeth. ''A Domestic History of the Bank of England, 1930–1960'' (2008
excerpt and text search
* Kynaston, David. 2017. Till Time's Last Sand: A History of the Bank of England, 1694–2013. Bloomsbury. * Lane, Nicholas. "The Bank of England in the Nineteenth Century." ''History Today'' (Aug 1960) 19#8 pp 535–541. * Roberts, Richard, and
David Kynaston David Thomas Anthony Kynaston (; born 30 July 1951 in Aldershot Aldershot () is a town in the Rushmoor district of Hampshire, England. It lies on heathland in the extreme northeast corner of the county, about southwest of London. The area ...
. ''The Bank of England: Money, Power and Influence 1694–1994'' (1995) * Sayers, R. S. ''The Bank of England, 1891–1944'' (1986
excerpt and text search
* Schuster, F. '' The Bank of England and the State'' * Wood, John H. ''A History of Central Banking in Great Britain and the United States'' (Cambridge University Press, 2005)


External links

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