Glossary

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.

Subscribe to MoneyWeek

Become a smarter, better informed investor with MoneyWeek.

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.

Advertisement

Most Popular

Visit/investments/commodities/gold/600874/gold-is-at-its-highest-level-in-years-heres-how-to-invest
Gold

Gold is at its highest level in years – here’s how to invest

Gold's rise at a time when the dollar is unnervingly strong isn't unheard of – but it is curious. John Stepek explains what's going on, and what it me…
21 Feb 2020
Visit/investments/stocks-and-shares/600863/sirius-minerals-anglo-american-takeover
Stocks and shares

Do you own shares in Sirius Minerals? Here’s what you need to do now

Mining giant Anglo American has proposed a cash takeover of Yorkshire-based minnow Sirius Minerals. Unhappy shareholders must decide whether to accept…
20 Feb 2020
Visit/economy/global-economy/600876/the-charts-that-matter-its-starting-to-look-a-little-unhinged-out
Global Economy

The charts that matter: it’s starting to look a little unhinged out there

Things aren't normal in the markets right now, says John Stepek. Here, he looks at the charts that matter most to the global economy for clues to what…
22 Feb 2020
Visit/517625/tr-european-growth-trust-why-investors-shouldnt-overlook-europe
Sponsored

Why investors shouldn’t overlook Europe

SPONSORED CONTENT - Ollie Beckett, manager of the TR European Growth Trust, tackles investor questions around Europe’s economic outlook and the conseq…
6 Nov 2019