The Bank of England (formally the Governor and Company of the Bank of England) is the central bank of the United Kingdom and the model on which most modern central banks have been based. Established in 1694, it is the second oldest central bank in the world (the oldest being the Sveriges Riksbank (Bank of Sweden), established in 1668).
The Bank of England has been heavily involved in the political and economic development of the nation. The bank has evolved with developments and enhanced its role at the centre of the national financial situation. Today its role is as important as it has ever been, supporting the government in its monetary decisions is a fundamental function that maintains the stability of the economy.
As an adjunct to this, maintaining financial stability is also a key role of the national bank. This is done by protecting the economy from any threats that may unsettle the financial situation. As a result, the bank must employ workers to investigate potential threats in the stock and other financial markets such as oil.
Sterling retained importance through the middle ages. Before the foundation of the Bank of England, the Tower of London was the store for spare money. Silver pennies were the only coins right through until the 13th century and silver was the currency standard till the 18th century, when gold became the basis of the pound.
Considered by some as the first move towards nationalisation, the 1844 Bank Charter Act was also the key move towards the Bank achieving the monopoly of the note issue. There were to be no new issuers of notes and any existing issuers that lapsed, or who were taken over, forfeited their right to issue. The crucial clause of the Act was a monetary one; it provided that, beyond the Bank's capital of £14 million, its notes were to be backed by gold or bullion.
Most people are unaware that the cheque goes back at least 300 years - before even the Bank of England was founded! We can find cheques and financial instruments from the Goldsmith days, the small private bankers, leading to today's joint stock banks - and a lot more in between.
In the beginning the Bank was the Government's banker; managing the Government's accounts and providing and arranging loans to the Government. It was also a commercial bank, dealing in bills - the then total equivalent of overdraft finance, furnishing finance for trade and took deposits and issued notes. The concept “credit” or “imaginary money” emerged during this period also. It was realised that money could take on new forms, possess no intrinsic value and yet still retain qualities to fulfil payment obligations. Therefore at the same time that the National Debt was born, paper money came into existence.
Bank of England, central bank and note-issuing institution of Great Britain. Popularly known as the Old Lady of Threadneedle Street, its main office stands on the street of that name in London. The bank has eight branches, all of which are located in the British Isles. Although Bank of England notes are legal tender throughout Great Britain and Northern Ireland, banks in Scotland and Northern Ireland also issue notes that may be either used as currency themselves or exchanged for Bank of England issues.
The bank was located first in Mercers’ Hall and then in Grocers’ Hall, but it was moved to its permanent location on Threadneedle Street in the 1730s. By that time it had become the largest and most prestigious financial institution in England, and its banknotes were widely circulated. As a result, it became banker to other banks, which, by maintaining balances with the Bank of England, could settle debts among themselves.
It was founded (1694) as a commercial bank by William Paterson with a capital of £1.2 million, which was advanced to the government in return for banking privileges, including the right to issue notes up to the amount of its capital. In 1709 the capital was doubled; the charter was renewed in 1742, 1764, and 1781. The bank's facilities proved a great asset in English commercial, and later industrial, expansion.
Bank of England, the central bank of the United Kingdom. Its headquarters are in the central financial district of the City of London.
The Bank of England was incorporated by act of Parliament in 1694 with the immediate purpose of raising funds to allow the English government to wage war against France in the Low Countries