What does the Bank of England do? (2024)

FAQs

What does the Bank of England do? ›

The BoE oversees the nation's monetary policy and issues its currency. It also regulates banks, financial institutions, and payment systems. It is the U.K. equivalent of the Federal Reserve in the U.S. Like the central banks of other nations, the BoE may act as a lender of last resort in a financial crisis.

We are the UK's central bank

So we produce banknotes (cash) and oversee many of the other payment systems you use (eg with a debit or credit card). We also work to keep the cost of living stable so your money keeps its purchasing power. One way we do this is by changing the main interest rate in the UK.

charging the firms we regulate a fee. providing banking services to our customers, who include overseas central banks. charging for the cost of producing banknotes. charging a management fee for services we provide to government agencies.

The bank has a monopoly on the issue of banknotes in England and Wales and regulates the issuance of banknotes by commercial banks in Scotland and Northern Ireland.

To control the money supply the Bank of England designs and produces banknotes (currency), making sure that they are difficult to copy, and replaces old or damaged ones. It also sets the interest rate for other banks. This is the amount of money other banks are charged for borrowing money from the Bank of England.

We are wholly-owned by the UK government. The capital of the Bank is held by the Treasury Solicitor on behalf of HM Treasury. Although we are owned by HM Treasury, we carry out our responsibilities independently.

Who owns the gold at the Bank of England? We only own two gold bars. Both of these are on display in our museum. Instead, we store the UK's gold reserves on behalf of HM Treasury Opens in a new window, and we also store gold bars on behalf of other central banks and certain commercial firms.

Banks and building societies pay us a fee to fund our work to set interest rates and protect the financial system. Banks, building societies and insurance companies also pay us a fee to cover the cost of regulating their activities. So do financial market infrastructure firms like Visa and Bacs.

As the central bank of the UK, the Bank of England acts as a lender of last resort for commercial banks that suffer a cash shortfall. This role helps maintain liquidity and confidence in the financial system.

HM Treasury owes £2.1trn to holders of British government securities, of which approximately £745bn is owed to the Bank of England and £1,355bn to external investors.

What bank does the royal family use? ›

Today, we are owned by the UK Government, who appoint all of our senior policymakers. But we have independence from the Government in terms of how we carry out our responsibilities.

Late 19th century

In 1869, Lionel's son, Alfred de Rothschild (1842–1918), became a director of the Bank of England, a post he held for 20 years. Alfred was one of those who represented the British Government at the 1892 International Monetary Conference in Brussels.

The Bank of England used to have branches around the country. But in 1997 they were replaced with 12 regional agencies. The former Leeds branch became a cash centre to help distribute banknotes around the country. The Agencies are the Bank of England's 'eyes, ears and voice' in their regions.

We set monetary policy to achieve the Government's target of keeping inflation at 2%. Low and stable inflation is good for the UK's economy and it is our main monetary policy aim. We also support the Government's other economic aims for growth and employment.

Although banks do many things, their primary role is to take in funds—called deposits—from those with money, pool them, and lend them to those who need funds. Banks are intermediaries between depositors (who lend money to the bank) and borrowers (to whom the bank lends money).