Bank of England

The Bank of England is the UK's central bank. It started life in 1694 as a private bank set up by London merchants as a vehicle to lend money to the government and to deal with the national debt.

The Bank of England is the UK's central bank. It began life in 1694 as a private bank set up by London merchants as a vehicle to lend money to the government and to deal with the national debt. That makes it the second-oldest central bank still in operation (the oldest is the Swedish central bank, which was set up in 1668). In 1946, it was nationalised.

It has a number of roles including overseeing the operation of the Royal Mint, which issues sterling notes and coins but its most important and high profile is to oversee monetary policy with the goal of maintaining financial stability in the UK.

The Bank's specific economic target is to keep the annual rate of UK inflation (as measured by the consumer price index, or CPI rate) at, or close to 2%. The Bank's Monetary Policy Committee (MPC) sets UK monetary policy by moving the bank rate Britain's key interest rate up and down. The MPC can also supplement the economy with measures such as quantitative easing (digitally creating new money in order to buy assets such as government bonds, in order to pump more money into the financial system with the goal of boosting the economy).

See Tim Bennett's video tutorial: George Osborne's £35bn raid on the Bank of England.

Recommended

Resource curse
Glossary

Resource curse

The term “resource curse” refers to the observation that countries with abundant natural resources also tend to be less economically developed than th…
14 Jan 2021
Balance of payments
Glossary

Balance of payments

The balance of payments refers to the accounts that sum up a country's financial position relative to other countries.
8 Jan 2021
Yield-curve control
Glossary

Yield-curve control

Yield-curve control is when a central bank aims to control long-term interest rates by pledging to buy (or sell) as many long-term bonds as needed to …
25 Dec 2020
Intangible assets
Glossary

Intangible assets

An intangible asset is anything that a company owns that isn’t physical.
25 Sep 2020

Most Popular

Why we won’t see a house-price crash in 2021
House prices

Why we won’t see a house-price crash in 2021

Lockdown sent house prices berserk as cooped up home-workers fled for bigger properties in the country. And while they won’t rise quite as much this y…
18 Jan 2021
Inflation is the easiest way out of this – just don’t expect politicians to admit it
Inflation

Inflation is the easiest way out of this – just don’t expect politicians to admit it

The UK government borrowed £34.1bn in December, a record amount for that month. Britain's debt pile now amounts to 100% of GDP. How are we going to pa…
22 Jan 2021
When will the US stockmarket bubble burst?
US stockmarkets

When will the US stockmarket bubble burst?

With US stocks more expensive than before the Wall Street crash of 1929, there are growing signs of “mania”. But what will push markets over the edge?
22 Jan 2021