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Central bank of the United Kingdom Governor and Company of the Bank of EnglandHeadquarters,England, United Kingdom:Established27 July 1694; 325 years ago ( 1694-07-27)(since 2013)Central bank ofUnited KingdomCurrencyGBP 0.75%WebsiteThe Bank of England is the of the and the model on which most modern central banks have been based. Established in 1694 to act as the 's banker, and still one of the bankers for the, it is the. It was privately owned by stockholders from its foundation in 1694 until it was nationalised in 1946.The Bank became an independent public organisation in 1998, wholly owned by the on behalf of the government, but with independence in setting monetary policy.The Bank is one of eight banks authorised to issue, has a monopoly on the issue of banknotes in and regulates the issue of banknotes by commercial banks in and.The Bank's has a devolved responsibility for managing. 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 held its first meeting in June 2011 as a to oversee regulation of the UK's financial sector.The Bank's headquarters have been in London's main financial district, the, on, since 1734. It is sometimes known as The Old Lady of Threadneedle Street, a name taken from a satirical cartoon by in 1797.
The road junction outside is known as.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consumer banking services for many years, but it still does manage some public-facing services such as exchanging superseded bank notes.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.
Sealing of the Bank of England Charter (1694), by Lady Jane Lindsay, 1905's crushing defeat by, the dominant naval power, in naval engagements culminating in the 1690, became the catalyst for England rebuilding itself as a global power. England had no choice but to build a powerful navy. No public funds were available, and the credit of 's government was so low in London that it was impossible for it to borrow the £1,200,000 (at 8% per annum) that the government wanted.To induce subscription to the loan, the subscribers were to be 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 to make more nails and advances in agriculture feeding the quadrupled strength of the navy, started to transform the economy. This helped the new – – 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, in 1694. The plan of 1691, which had been proposed by three years before, had not then been acted upon.
58 years earlier, in 1636, Financier to the king, had proposed exactly the same idea in a letter addressed to. 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 was granted on 27 July through the passage of the. 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, who is depicted in the issued in 1994. The charter was renewed in 1742, 1764, and 1781.18th century. Satirical cartoon protesting against the introduction of paper money, by, 1797. Bank of England (8)The 1844 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 for the first time in the.The last private bank in England to issue its own notes was Thomas Fox's bank in, 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.20th century.
This section needs additional citations for. Unsourced material may be challenged and removed.Find sources: – ( July 2017) 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, which is decided by the, and through its communications strategy, such as publishing. Maintaining financial stability involves protecting against threats to the whole financial system.
Threats are detected by the Bank's surveillance and 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 by extending credit when no other institution will.The Bank works together with other institutions to secure both monetary and financial stability, including:., 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 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.The Bank acts as the government's banker, and it maintains the government's account. It also manages the country's.
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 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 in December 2002, under the advice of Close Brothers Corporate Finance Ltd.Since 1998, the (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, which also took over government cash management in 2000. Took over as the registrar for UK Government bonds ( 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 (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 and ran the competition for A-level students, closing in 2017. Asset purchase facilityThe 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 '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 (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. Main article: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 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.
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The last private bank to issue its own banknotes in England and Wales was 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, regulated by the Bank.At the start of the, the was passed, which granted temporary powers to 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 (Bank of England notes did not begin to display an image of the monarch until 1960). The wording on each note was:UNITED KINGDOM OF GREAT BRITAIN AND IRELAND – Currency notes are Legal Tender for the payment of any amount – Issued by the Lords Commissioners of His Majesty's Treasury under the Authority of Act of Parliament (4 & 5 Geo. V c.14).Treasury notes were issued until 1928, when the returned note-issuing powers to the banks. The Bank of England issued notes for ten and one pound for the first time on 22 November 1928.During the Second World War the German 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 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 in.Modern banknotes are printed by contract with Currency in.
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Gold vaultThe bank is custodian to the official gold reserves of the United Kingdom and around 30 other countries. The vault, beneath the, covers a floor space greater than that of the fifth-tallest building in the City, and needs keys that are three feet (0.91 m) long to open. As of April 2016, the bank held around 400,000 bars, which is equivalent to 5,134 tonnes (5,659 tons) of gold.
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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. Main article:Following is a list of the Governors of the Bank of England since the beginning of the 20th century: NamePeriod181–190197–190193–191194–194196–197193–2002013–Court of DirectorsThe 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 one of 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.Court of Directors (2019)NameFunctionChairman of Court.