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

High street giant HSBC to close 114 branches
Personal finance

High street giant HSBC to close 114 branches

HSBC is to shut the doors of 114 branches as more customers switch to online banking.
30 Nov 2022
House prices expected to fall by 5% in 2023
House prices

House prices expected to fall by 5% in 2023

House prices could fall by 5% next year as rising mortgage rates weigh on buyer demand.
30 Nov 2022
The best offers for switching banks – get up to £200 free cash
Personal finance

The best offers for switching banks – get up to £200 free cash

Looking to move bank accounts? You can now bag as much as £200 for switching current accounts from two major banks
30 Nov 2022
Stock market crash? This time it’s (slightly) different
Stockmarkets

Stock market crash? This time it’s (slightly) different

The bears expecting a stock market crash have got it wrong, says Max King.
30 Nov 2022

Most Popular

Fan heater vs oil heater – which is cheaper?
Personal finance

Fan heater vs oil heater – which is cheaper?

Sales of portable heaters have soared, as households look to cut their energy costs. But which is better: a fan heater or an oil heater? We put them t…
21 Nov 2022
Wood-burning stove vs central heating ‒ which is cheapest?
Personal finance

Wood-burning stove vs central heating ‒ which is cheapest?

Demand for wood-burning stoves has surged as households try to reduce their heating costs this winter. But how does a wood burner compare with central…
29 Nov 2022
Best regular savings accounts – November 2022
Savings

Best regular savings accounts – November 2022

You can earn an attractive rate on the best regular savings accounts. We tell you the best on the market to take advantage of right now
29 Nov 2022