Day 6: The Bank of England
What does the bank do?
The BoE is the central bank for the whole of the United Kingdom. This gives a an enormous amount of responsibility. Its primary function is to ‘maintain monetary stability and oversee financial stability of the UK financial system’. Essentially keeping a stable price level, low level of inflation and ensuring a resilient financial system. The bank also is responsible for the security of banknotes and the supervision of all other banks, credit unions insurers and investment firms in the UK. The security of these firms and banks, ensured by a stable economy. However if there are banks in trouble the BoE will can lend services and money.
History of the Bank
The bank was founded back in 1694 as a private bank, later to be nationalised in 1946. Meaning it was no longer owned by private shareholders, but the government. It wasn’t until 1720 before the first denominated (specific monetary unit) bank notes were made and issued. However without modern day security features, the notes were subject to forgery (which became very popular in the restriction period between 1797–1821).
When war struck in 1914 the bank was also heavily involved. By financing the government through the war the government built up a lot of debt.
In 1931 the UK abandoned the Gold Standard. The Gold Standard was a monetary system which relied on the countries amount of gold determining the worth of the currency. The gold reserves kept at the BoE are remnants from the era of the Gold Standard. Currently over £200 billion worth of gold is kept secured in the Bank of England, making up part of the UK’s wealth.
Andrew Bailey
Andrew Bailey is a banker and now the current Governor of the Bank of England, as of March 2020. His job as governor means he is responsible for overseeing the bank and the various responsibilities that come with it. As stated previously, one of the bank’s main jobs is to maintain a stable cost of living. By keeping a consistently low but rising inflation (2% annually).
Along with overseeing this he helps ensure that the bank (and other banks) are connected to investors, savers and people who want to take out loans. This is done through a stable financial system. The bank has to monitor risks and assess the system in order to reduce these risks. Doing services for individual banks and firms as well.
financing the government through the war the government built up a lot of debt.
