The Bank of England (BoE) is the central bank of the United Kingdom. It has the exclusive right of note issue in England and Wales. As per Kavan Choksi UK, the BoE also controls currency circulation and monetary policy. It has a huge role to play in regulating financial services firms within the United Kingdom. Such functions help make sure that the UK financial system remains buoyant and has the capacity to handle financial crises.
Kavan Choksi UK underlines the history and role of the Bank of England (BoE)
The Bank of England (BoE) is a pivotal institution in both the national and global economy. Located in the heart of the financial district of London, the BoE plays a key role in the financial architecture of the United Kingdom. It is tasked with the duty of maintaining monetary and financial stability.
The Bank of England was created way back in the year of 1694 as a private bank. Back then, the back used to provide loans and other services to the British government in times of economic distress. It was one of the oldest banks in the world, and issued its first bank notes in 1725. It was in 1844 that the BoE began to integrate into the British government. The Bank Charter Act of 1844 restricted any new banks from issuing bank notes, and the notes of the Bank of England became formalized in the UK. The BoE played an instrumental role in establishing the financial infrastructure of the United Kingdom over the next century. It also had a part to play in navigating crises like World War I and II.
Today the Bank of England is a public entity that directly answers to the UK Parliament. It offers a range of public services, starting from issuing bank notes and designing monetary policy to holding the gold reserves for the United Kingdom. BoE is responsible for currency management in the country. All of the currencies that are in circulation in the UK are produced and controlled directly by the BoE. The central bank is also known as the official custodian of gold reserve for the United Kingdom and certain other nations. It is estimated that the BoE holds about 3% of all of the gold that was mined in human history.
As Kavan Choksi UK mentions, the BoE plays a supervisory role over all the banks that operate in the United Kingdom. As the central bank of the country, BoE sets all of the regulatory requirements that must be followed by other banks. All major financial institutions, including investment firms, are required to complete regulatory reporting to the BoE on their operations.
The Bank of England sets the monetary policy of the UK primarily by managing the interest rate that impacts borrowing costs and consumer spending in the country. The key goal of the central bank is to achieve the government’s set target of 2% inflation which helps in stabilizing the economy. The Monetary Policy Committee (MPC) meets at regular intervals in order to review and set interest rates on the basis of current economic conditions.
