27 July 1694: the Bank of England is created by Royal Charter

In return for a loan of £1.2m to rebuild the country's finances, King William III granted a Royal Charter to the Governor and Company of the Bank of England on this day in 1694.

Central banks these days are all-powerful behemoths, pulling the strings of the world's economies. But they didn't start out like that.

The world's first central bank was Sweden's Riksbank, famous these days for being among the first to bring in negative interest rates after the 2008 financial crisis. That was established in 1668. Then, 26 years later, came the Bank of England.

As with income tax, the Bank was born out of war with, inevitably, France. Uncharacteristically, the French had secured victory against an English and Dutch fleet in the Battle of Beachy Head. England spent a fortune rebuilding its navy and was (again) running out of money. Something had to be done.

And so, with £1.2m having been raised from investors and loaned to the government at a fairly profitable 8% rate of interest, King William III (star of the Glorious Revolution), sealed a Royal Charter on this day in 1694, creating the Bank of England.

The charter gave the Governor and Company of the Bank of England a banking monopoly over the kingdom. It opened for business a few days later in Mercers' Hall, Cheapside, soon moving to the Grocers' Hall, then in 1734, to Threadneedle Street.

As well as acting as the government's banker and debt manager, it carried out normal retail banking taking deposits, making loans, and issuing coins. It rode out the South Sea Bubble in the 1720s when so many others went to the wall, and became the lender of last resort. 

In 1797, it issued its first pound note (again as a result of war with France). And in 1844, it was granted a monopoly to print banknotes in England and Wales.

It was nationalised in 1946 by the government of Clement Attlee, and in 1997, it was given responsibility for monetary policy.

Recommended

Model Y: Tesla has nailed it once again
Cars

Model Y: Tesla has nailed it once again

The electric carmaker’s new SUV crossover, the Model Y, sets the benchmark in the sector.
18 Jan 2022
The UK jobs market is booming – but wages are struggling to keep up with prices
UK Economy

The UK jobs market is booming – but wages are struggling to keep up with prices

Britain’s jobs market is booming, with wages rising and plenty of of vacancies. But inflation is rising faster than wages can keep up. John Stepek loo…
18 Jan 2022
A sophisticated trio of scintillating whites
Wine

A sophisticated trio of scintillating whites

An Australian sauvignon blanc that is as sophisticated and refreshing as any Loire superstar’s creation, plus a chardonnay and shiraz, too.
18 Jan 2022
Made money in cryptocurrencies? Don’t forget to pay your taxes – in sterling
Bitcoin & crypto

Made money in cryptocurrencies? Don’t forget to pay your taxes – in sterling

Speculating on cryptocurrencies is akin to gambling in all but one respect, says Merryn Somerset Webb: you must pay tax on any gains, and you must pay…
18 Jan 2022

Most Popular

Five unexpected events that could shock the markets in 2022
Stockmarkets

Five unexpected events that could shock the markets in 2022

Forget Covid-19 – it’s the unexpected twists that will rattle markets in 2022, says Matthew Lynn. Here are five possibilities
31 Dec 2021
Which investment trusts performed the best in 2021?
Investment trusts

Which investment trusts performed the best in 2021?

Shivani Khandekar runs through the top ten investment trusts of 2021 – and the worst performing trusts – and looks ahead to 2022.
7 Jan 2022
Interest rates might rise faster than expected – what does that mean for your money?
Global Economy

Interest rates might rise faster than expected – what does that mean for your money?

The idea that the US Federal Reserve could raise interest rates much earlier than anticipated has upset the markets. John Stepek explains why, and wha…
6 Jan 2022