Bank of England


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Bank of England

The central bank of the United Kingdom. It is let by a Governor, which is at least nominally a civil service post. The Bank of England prints money for England and Wales (though not for Northern Ireland or Scotland) and acts as a lender of last resort for all banks in the UK. Through its semi-independent Monetary Policy Committee, the Bank of England sets monetary policy for the UK, particularly by attempting to ensure that inflation remains as close as possible to 2%. If the inflation rate is more than 1% in either direction of 2%, the Governor of the Bank of England must write the Chancellor of the Exchequer to explain how he/she will remedy the situation. It was established in 1694 and served as the model for the creation of most modern central banks. See also: Federal Reserve System, European Central Bank.

Bank of England

the CENTRAL BANK of the UK which acts as banker to the government and the BANKING SYSTEM and acts as the authority responsible for implementing MONETARY POLICY. The Bank of England handles the government's financial accounts in conjunction with the TREASURY, taking in receipts from taxation and the sale of government assets, and making disbursements to the various government departments to fund their activities. The Bank acts as the government's broker in its borrowing and lending operations, issuing and dealing in government BONDS and TREASURY BILLS to underpin its year-to-year budgetary position and management of the country's NATIONAL DEBT.

COMMERCIAL BANKS hold accounts with the Bank of England and, in its role as banker to the banking system, the Bank makes it possible for banks to settle their indebtedness with one another by adjusting their accounts as appropriate (see CLEARING HOUSE SYSTEM).

The Bank of England and its satellite, the Royal Mint, are responsible for issuing the country's basic stock of money – LEGAL TENDER consisting of bank notes and coins (see MONEY SUPPLY). The bank occupies a key role in the implementation of monetary policy through controls on the money supply, influencing the level of bank deposits and credit creation by the financial institutions, particularly commercial banks, while the MONETARY POLICY COMMITTEE has the responsibility for setting ‘official’ INTEREST RATES in the UK which in turn determines all other short-term interest rates (BASE RATE, BILL DISCOUNTING INTEREST RATE, INTERBANK CLEARING INTEREST RATE).

The Bank is also responsible for managing the country's EXCHANGE RATE and holding the country's stock of INTERNATIONAL RESERVES to be used in the financing of balance of payments deficits. The Bank of England operates a ‘Foreign Exchange Equalization Account’ which it uses to intervene in the FOREIGN EXCHANGE MARKET, buying and selling currencies to support the exchange rate at a particular level or to ensure that it falls (depreciates) or rises (appreciates) in an ‘orderly’ manner. See LENDER OF LAST RESORT.

Bank of England

the CENTRAL BANK of the UK, which acts as banker to the government and the BANKING SYSTEM and acts as the authority responsible for implementing MONETARY POLICY. The Bank of England handles the government's financial accounts in conjunction with the TREASURY, taking in receipts from taxation and the sale of government assets, and making disbursements to the various government departments to fund their activities. The bank acts as the government's broker in its borrowing and lending operations, issuing and dealing in government BONDS and TREASURY BILLS to underpin its year-to-year budgetary position and management of the country's NATIONAL DEBT.

COMMERCIAL BANKS hold accounts with the Bank of England and, in its role as banker to the banking system, the Bank makes it possible for banks to settle their indebtedness with one another by adjusting their accounts as appropriate (see CLEARING HOUSE SYSTEM).

The Bank of England and its satellite, the Royal Mint, are responsible for issuing the country's basic stock of money - LEGAL TENDER, consisting of bank notes and coins (see MONEY SUPPLY). The Bank occupies a key role in the implementation of monetary policy through controls on the money supply, influencing the level of bank deposits and credit creation by the financial institutions, particularly commercial banks (see BANK DEPOSIT CREATION), while the MONETARY POLICY COMMITTEE has the responsibility for setting ‘official’ INTEREST RATES in the UK, which in turn determines all other short-term interest rates (BASE RATE, BILL DISCOUNTING INTEREST RATE, INTERBANK CLEARING INTEREST RATE).

The Bank is also responsible for managing the country's EXCHANGE RATE and holding the country's stock of INTERNATIONAL RESERVES to be used in the financing of balance-of-payments deficits. The Bank of England operates a ‘Foreign Exchange Equalization Account’ that it uses to intervene in the FOREIGN EXCHANGE MARKET, buying and selling currencies to support the exchange rate at a particular level or to ensure that it falls (depreciates) or rises (appreciates) in an ‘orderly’ manner. See LENDER OF LAST RESORT.

References in periodicals archive ?
e Bank of England is likely to start raising interest rates before the slack has completely gone due to the lagged e$ect that results from changing monetary policy.
Under the Bank of England Act 1998, as expected to be amended by the Financial Services Bill which is currently being considered by Parliament, the Governor of the Bank of England is appointed by Her Majesty the Queen on advice from the Prime Minister.
Inflation still looks set to fall below its target further ahead and today's figures support our view that we will see more QE from the Bank of England next month in an attempt to prevent this," said Vicky Redwood, chief U.
5 per cent, the Bank of England would increase the amount of money pumped into the economy from Au175 billion to Au225 billion.
This overshoot of the official target required the Bank of England to write explanatory letters to the Chancellor of the Exchequer.
The Bank of England has slashed British borrowing costs since October last year, when they stood at 5 per cent.
The Bank of England made an unprecedented move to deny the rumours that Halifax Bank of Scotland had turned to it for emergency funding.
The Bank of England yesterday moved to pump pounds 5 billion into frozen money markets to ease credit fears.
Mervyn King [left], current Governor of the Bank of England, and Norman Lamont, Chancellor of the Exchequer in 1992.
How did a Customs official tell the difference between a perfect forgery and the genuine Bank of England note?
For an institution that spent its first 40 years renting buildings designed for other purposes, the Bank of England has an enviable architectural reputation.
In June the Bank of England increased interest rates after receiving incorrect figures in a report from the Office of National Statistics.

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