The Bank of England (BoE) serves as the central bank of the United Kingdom. It is the ultimate national monetary authority of the country. As Kavan Choksi Wealth Advisor mentions, the BoE was established in the year of 1694, and its key function was to act as the banker of the British Government. However, its responsibilities have changed a lot since then.
Kavan Choksi Wealth Advisor underlines the duties and responsibilities of the BoE
The Bank of England was privately by shareholders initially. It was nationalized in 1946, and became an independent public organization in 1998. This change provided the bank with a higher degree of operational independence in carrying out its discerning functions. Today the BoE is responsible for issuing and managing the UK’s currency, implementing monetary policies and maintaining financial stability in the country.
Only the Bank of England can issue banknotes in England and Wales. Apart from having a monopoly in printing and issuing the Great Britain pound in the UK, the BoE also oversees payments made by the GBP using debit/credit cards and digital payment systems.
BoE focuses on making sure that people have confidence in the British Pound, and try to make sure that the banknotes feature the latest anti-forgery features. In the September of 2016, the BoE issued a new £5 note, which was its very first banknote made from polymer. Polymer is a thin, flexible plastic material. Notes made from polymer notes are much harder to forge.
The Bank of England is known to be the government’s banker. It facilitates national transactions and manages government accounts. The bank also holds the country’s gold and FOREX reserves. BoE additionally manages liquidity in the market through its asset purchase facility from funds raised through the issue of government bonds and cash from the debt management office.
As Kavan Choksi Wealth Advisor says, the BoE is responsible for keeping the economy of the United Kingdom on the right track. One of the ways they achieve this goal is through monetary policy. BoE tends to operate monetary policy by making changes to the interest rate or the Bank rate. Managing inflation through base interest rates is one of the most essential functions of any central bank, including the BoE. In certain circumstances, they also supplement this step with measures like quantitative easing. Decisions on the monetary policies of the UK are made by the BoE’s Monetary Policy Committee (MPC).
The Bank of England is tasked with the responsibility of ensuring the stability of the financial system in the United Kingdom. Its Financial Policy Committee (FPC) identifies and monitors risks in the financial system, and proactively takes action for reducing or managing risks whenever necessary. The BoE may even provide liquidity support to financial institutions struggling to gain access to adequate cash flow and are on the brink of collapse. BoE is known to be the lender of last resort in the United Kingdom. It supports other private and public banks from going into bankruptcy and protects their clients. The financial planning committee of the BoE also regulates and supervises other banks and insurance companies in the UK.
