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Established in 1694 to act as the English Government's banker, and still one of the bankers for the Government of the United Kingdom, it is the world's eighth-oldest bank. It was privately owned by stockholders from its foundation in 1694 until it was nationalised in 1946 by the Attlee ministry.
The bank became an independent public organisation in 1998, wholly owned by the Treasury Solicitor on behalf of the government, with a mandate to support the economic policies of the government of the day, but independence in maintaining price stability.
The bank is one of eight banks authorised to issue banknotes in the United Kingdom, has a monopoly on the issue of banknotes in England and Wales, and regulates the issue of banknotes by commercial banks in Scotland and Northern Ireland.
The bank's Monetary Policy Committee has devolved responsibility for managing monetary policy. The Treasury has reserve powers to give orders to the committee if they are required in the public interest and by extreme economic circumstances, but Parliament must endorse such orders within 28 days. In addition, the bank's Financial Policy Committee was set up in 2011 as a macroprudential regulator to oversee the UK's financial sector.
The bank's headquarters have been in London's main financial district, the City of London, on Threadneedle Street, since 1734. It is sometimes known as The Old Lady of Threadneedle Street, a name taken from a satirical cartoon by James Gillray in 1797. The road junction outside is known as Bank Junction.
As a regulator and central bank, the Bank of England has not offered consumer banking services for many years, but it still does manage some public-facing services, such as exchanging superseded bank notes. Until 2016, the bank provided personal banking services as a privilege for employees.
England's crushing defeat by France, the dominant naval power, in naval engagements culminating in the 1690 Battle of Beachy Head, became the catalyst for England to rebuild itself as a global power. William III's government wanted to build a naval fleet that would rival that of France; however, the ability to construct this fleet was hampered both by a lack of available public funds and the low credit of the English government in London. This lack of credit made it impossible for the English government to borrow the £1,200,000 (at 8% per annum) that it wanted to construct the fleet.
In 1700, the Hollow Sword Blade Company was purchased by a group of businessmen who wished to establish a competing English bank (in an action that would today be considered a back door listing). The Bank of England's initial monopoly on English banking was due to expire in 1710. However, it was instead renewed, and the Sword Blade company failed to achieve its goal.
In 1825–26 the bank was able to avert a liquidity crisis when Nathan Mayer Rothschild succeeded in supplying it with gold.
The last private bank in England to issue its own notes was Thomas Fox's Fox, Fowler and Company bank in Wellington, which rapidly expanded until it merged with Lloyds Bank in 1927. They were legal tender until 1964. There are nine notes left in circulation; one is housed at Tone Dale House, Wellington.
The bank is custodian to the official gold reserves of the United Kingdom and around 30 other countries.As of April 2016, the bank holds around 5,659 tons of gold, worth £141 billion. These estimates suggest that the vault could hold as much as 3% of the 171,300 tonnes of gold mined throughout human history.
More information: Bank of England
We are actors in a play written by others.
Mark Carney
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