Bank of England

Bank of England The central bank of the UK. It was established in 1694 as a private bank by London merchants in order to lend money to the state and to deal with the national debt. It came under public ownership in 1946 with the passing of the Bank of England Act. The Bank of England acts as the government's bank, providing loans through ways and means advances and arranging borrowing through the issue of gilt-edged securities. The bank helps to implement the government's financial and monetary policy as directed by the Treasury. Since May 1997 its Monetary Policy Committee has had sole authority for setting the base rate, which was formerly a joint decision of the Chancellor of the Exchequer and the Governor of the Bank of England (although the Chancellor retains the right to overrule the Governor in exceptional circumstances). It formerly had wide statutory powers to supervise the banking system, including the commercial banks, but these supervisory powers have now passed to the Financial Services Authority. The bank, however, retains its responsibility for systemic stability and that of lender of last resort.

The Bank Charter Act 1844 divided the bank into an issue department and a banking department. The issue department is responsible for the issue of banknotes and coins as supplied by the Royal Mint. The banking department provides banking services (including accounts) to commercial banks, foreign banks, other central banks, and government departments. The bank manages the national debt, acting as registrar of government stocks. It also manages the exchange equalization account. The bank is controlled by a governor, two deputy governors, and a court (board) of 16 directors.