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.

Mercers' Chapel and Hall, Cheapside
Mercers' Hall, site of the first Bank of England
(Image credit: © Guildhall Library & Art Gallery/Heritage Images/Getty Images)

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.

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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.

Ben Judge

Ben studied modern languages at London University's Queen Mary College. After dabbling unhappily in local government finance for a while, he went to work for The Scotsman newspaper in Edinburgh. The launch of the paper's website, scotsman.com, in the early years of the dotcom craze, saw Ben move online to manage the Business and Motors channels before becoming deputy editor with responsibility for all aspects of online production for The Scotsman, Scotland on Sunday and the Edinburgh Evening News websites, along with the papers' Edinburgh Festivals website.

Ben joined MoneyWeek as website editor in 2008, just as the Great Financial Crisis was brewing. He has written extensively for the website and magazine, with a particular emphasis on alternative finance and fintech, including blockchain and bitcoin. As an early adopter of bitcoin, Ben bought when the price was under $200, but went on to spend it all on foolish fripperies.