|The Bank of England|
The Bank of England is the central bank of the United Kingdom. Sometimes known as the 'Old Lady' of Threadneedle Street, the Bank was founded in 1694, nationalised in 1946, and gained operational independence in 1997. Standing at the centre of the UK's financial system, the Bank is committed to promoting and maintaining a stable and efficient monetary and financial framework as its contribution to a healthy economy.
The Bank's roles and functions have evolved and changed over its three-hundred year history. Since its foundation, it has been the Government's banker and, since the late 18th century, it has been banker to the banking system more generally - the bankers' bank. As well as providing banking services to its customers, the Bank of England manages the UK's foreign exchange and gold reserves and the Government's stock register.
The Bank is perhaps most visible to the general public through its banknotes and, more recently, its interest rate decisions. The Bank has had a monopoly on the issue of banknotes in England and Wales since the mid 19th century. But it is only since 1997 that the Bank has had statutory responsibility for setting the UK's official interest rate.
Interest rates decisions are taken by the Bank's Monetary Policy Committee. The MPC has to judge what interest rate is necessary to meet a target for overall inflation in the economy. The inflation target is set each year by the Chancellor of the Exchequer. This is part of the Bank's objective to 'maintain the integrity and value of the currency' - to achieve price stability in the economy. The Bank implements its interest rate decisions through its financial market operations - it sets the interest rate at which the Bank lends to banks and other financial institutions. The Bank has close links with financial markets and institutions. This contact informs a great deal of its work, including collating and publishing monetary and banking statistics.
The Bank analyses and promotes initiatives to strengthen the financial system, and monitors financial developments to try to identify potential threats to financial stability. It also undertakes work on the arrangements for handling financial crises should they occur and is the financial system's 'lender of last resort' in exceptional circumstances.
Much of the Bank's work involves liaison and cooperation with the Government, institutions and other central banks. Given London's position as a large international financial centre, the Bank's work addresses international as well as domestic developments.
This involves work on issues such as firms' access to finance and, over recent years, the introduction of the Euro and the evolution of the euro financial markets and infrastructure.
Sir Edward George- Governor of the Bank of England
This information has been provided by the kind permission of Bank of England