Bank of England
| Headquarters | London , England |
| founding | July 27, 1694 |
| president | Andrew Bailey |
| country | the United Kingdom of Great Britain and Northern Ireland |
| currency | |
| ISO 4217 | GBP |
| Currency reserves | US $ 177.3 billion (end of 2019) |
| Base loan rate | 0.5% |
| printer | De la Rue |
| Website | http://www.delarue.com |
| Mint (s) | Royal Mint |
| Website | http://www.royalmint.com |
| Website | |
| predecessor |
The Governor and Company of the Bank of England |
| List of central banks | |
The Bank of England ( English 'Bank of England') is the central bank of the United Kingdom of Great Britain and Northern Ireland and is based in London . The institute, which was founded in 1694 and nationalized in 1946, temporarily fulfilled both administrative and private economic functions and determined the monetary and currency policy for the pound sterling . It is a member of the European System of Central Banks .
history
When King William III. and Queen Mary II ascended the throne in 1688, money and credit were shattered, and public finances were also in a difficult position.
The enormous losses of the English merchant fleet in the attack on the Smyrna convoy in 1693 led to a wave of bankruptcies among London traders and insurers. There was no money for the urgently needed expansion of the Royal Navy to protect maritime trade.
In this situation, the Scottish merchant William Paterson proposed in 1694, with the help of Charles Montagu and Michael Godfrey , to grant the government a loan through an association of 1,268 creditors. The signatories of this bond received the royal privilege of a central bank in the legal form of a corporation under the on July 27th, 1694 Company The Governor and Company of the Bank of England to start. The share capital in the amount of 1.2 million pounds was granted to the State as a loan at eight percent interest. This lending rate was relatively low for the circumstances at the time. In return, the Bank of England was given the right to issue banknotes and conduct banking business in the amount of the loan . However, it was forbidden to make loans to the government without the approval of Parliament.
When the Bank of England was founded, there was a direct link to the financial deficits of King William III. He urgently needed capital for the war against France and the expelled King Jacob II. The Bank of England always had a good relationship with the Crown, so that over time its influence should expand.
The Bank of England's first offices were in the Mercers 'and Grocers' Halls, the guild houses of silk merchants and shopkeepers. When business began, there were 17 employees and two porters. The Bank of England became the model for many central bank establishments in Europe.
In 1697 the bank increased its capital to £ 2,201,171 by accepting notes it was unable to redeem and depreciated state treasury bills as capital payments. She received assurance that the state would not establish a second bank by law. At the same time, her privilege was extended until 1710.
18th century
Under the government that followed, the bank again granted the state its aid several times and received important rights in return. In addition to the continuation of its existence until 1742, it was given the important privilege in 1708 that, apart from itself, no bank company in England with more than six partners was allowed to issue notes. The 1708 statute also stipulated that the bank should provide a government loan of £ 400,000 and that the interest rate on the total national debt would be reduced to six percent.
In 1734 the seat was moved to Threadneedle Street . The bank gradually enlarged its property there to the level it can see today. The church of Saint Christopher le Stocks , built by Sir Christopher Wren , was demolished because of it.
The privilege obtained was renewed in 1742, 1764 and 1781. In 1742 the privilege could be extended to 1764 in exchange for an interest-free loan to the state of 1,600,000 pounds. This amount was raised by increasing the share capital to £ 9,800,000. In 1784 the privilege was renewed until 1786 against a payment of 100,000 pounds and 1781–1812 against a three percent loan of 3 million pounds over three years. In critical times, which occurred several times during the 18th century, the bank always knew how to fulfill its obligation to redeem notes.
At the time, the agreements that led to the repeated extensions of the privilege were very controversial. The conditions that have been laid down for these expansions were, in the opinion of the critics, designed too much to the advantage of the Bank of England and, in return, gave the state too little benefit.
The institute kept government accounts and granted loans to finance both war and peacetime. As a commercial bank , it also accepted deposits and issued banknotes. In the 18th century the government borrowed more and more money. These outstanding bonds were eventually called sovereign debt .
Confidence in the Bank of England was so great that they in the renewal of the privilege in 1781 to the state Treasury ( Treasury was designed) and her to be the task of bankers' bank, increment. The bank became responsible if all depositors decided to withdraw their money at the same time. The bank ensured that there was enough gold to be able to use it for their banknotes on request.
As a result of the war with France (declared by France on February 1, 1793), financial relations with the state exhausted the bank's resources; in February 1797, with banknotes in circulation of £ 8,644,250, she had cash assets of only £ 1,272,000. She was exempt from paying in cash by means of a cabinet order of February 26, 1797, which was later confirmed by Parliament .
In this epoch of the irreversibility of banknotes or the " bank restriction ", which ultimately lasted until May 1, 1821, there was a discount of up to 30 percent (namely in the years 1804 , 1809 , 1811, 1814), when one exchanged paper banknotes for coins.
19th century
In 1816 the capital of the bank was increased to £ 14,553,000 by transferring part of the reserve to the shareholders . At the same time, loans to the state rose to a total of £ 14,686,000.
Since 1826, the Bank of England has not issued notes under five pounds and began to open branches. She also made the admission not to oppose the issuance of banknotes by joint-stock banks if they were not located within 65 miles of London.
In 1833 the privilege was extended, which in turn prompted the bank to make concessions to the public. In order to make exchanging notes for gold superfluous, they were declared legal tender . In the same year the bank building was completed according to plans by Sir John Soane . Parts, especially the facade, are still preserved today. Above the Corinthian columns designed by Soanes is a group of sculptures designed by Charles Wheeler , over which a stone Britannia towers.
In order to be able to fully meet the obligation to redeem its notes for gold, the Bank of England took out a loan from the Banque de France during the crisis of 1839 .
In 1844 new legislation was passed under Prime Minister Sir Robert Peels . Acts 7 and 8 initially regulated the situation in England , while the similar reorganization of the institutions in Ireland and Scotland took place in 1845.
The main purpose of the law in England was to centralize the issuance of banknotes while at the same time limiting the issuance of uncovered banknotes to a certain extent. For this reason, the former freedom to issue notes, which had existed for all banking transactions with fewer than six participants across the country and also for the joint stock banks distant from London, was abolished. Only those banks which operated the issuing business on May 6, 1844 should be allowed to continue the same and continue to issue banknotes up to an amount equal to the average amount of their banknote circulation during the previous three months. With regard to the Bank of England , it was ruled that it could not issue more than £ 14 million of unsecured notes, but there was no limit on the amount of covered notes for it. It was also stipulated that two thirds of the banknote amount that would be lost if the smaller banks ceased issuance should accrue to the Bank of England's right to issue .
The banking privilege law of 1844 made the issue of banknotes dependent on the bank's gold inventory. The bank was required to keep the books for issuing notes separate from those for banking transactions and to issue a weekly report for both accounts.
The Peel's Bank [Charter] Act relied on currency theory in its currency regulations. This conceptual model considers the amount that a country needs in banknotes to transfer money to be relatively constant. The bank therefore required full gold cover for the currency in the amount of the notes in circulation , apart from a small amount of uncovered money. This remainder was initially set at the aforementioned £ 14 million and later revised upwards several times. The so-called central bank ID is still published every week today.
The 1844 Bank Act gave the Bank of England the sole right to issue banknotes in England and Wales . Private banks, which previously had the same rights, were allowed to keep them provided that they deposited collateral in the amount of the banknotes issued. Some English banks continued to issue their notes until the last of them was adopted in the 1930s. Old Scottish and Northern Irish private banks still have these rights today.
Two separate departments were created to ensure compliance with the regulations governing banknote coverage , the Issue department (for issuing banknotes) and the Banking department (for processing bank transactions). In the former, which was not allowed to conduct business with the public, the notes were made and the cover kept in stock.
In the 19th century, the bank also took on the role of central bank and ensured stability during some financial crises. Due to its rigidity, the bank file occasionally proved to be a hindrance and was therefore temporarily suspended several times. For example, in 1847, 1857 and 1866 the government temporarily suspended the regulations on the maximum amount of uncovered banknotes to allow the bank to grant extended loans in times of trade crises.
In 1870 the Bank of England was given responsibility for setting interest rates.
20th century
During the First World War , the national debt surpassed the 7 billion pound mark. The bank helped manage national debt and resist inflationary trends. The bank record was broken by a gold export ban and the creation of so-called currency notes . From 1925 England returned to the gold standard with the lifting of the gold export ban. Great Britain finally left the gold standard system on September 21, 1931 . The British pound was a free currency until 1946 .
The national gold holdings and foreign exchange reserves were transferred to the Treasury. But their management was continued by the bank, and it has remained so to this day.
In 1933 their banknotes became legal tender throughout the kingdom. During the governor of Sir Montagu Norman (1920 to 1944) efforts began to move away from the commercial bank and become the central bank. From 1923 to 1939, space requirements led to a redesign of the bank under the responsible direction of Sir Herbert Baker , which was expanded to seven floors.
After the Second World War , the bank was nationalized on March 1, 1946. However, she remained an advisor to the Chancellor of the Exchequer , his agent and debt manager. The Chancellor of the Exchequer was authorized to issue instructions, but had to contact the bank governor beforehand. The Bank of England was after the nationalization as a banker to the government designed with advice on monetary policy issues. She was responsible for the orientation and implementation of both monetary and foreign exchange policy measures.
The existing shareholders received a total settlement amount of £ 5,821,200 in government bonds upon nationalization .
A parity of £ 1.00 = US $ 4.03 was agreed with the International Monetary Fund in the Bretton Woods Agreement . On September 18, 1949, the currency was devalued to an exchange ratio of £ 1.00 = US $ 2.80. Another devaluation had to take place in 1967 because the country had fallen behind in world trade and therefore its balance of payments had deteriorated over the years.
In 1971 the Bank of England renounced the instrument of credit capping , but received the instrument of the minimum reserve . In 1979 she was legally entrusted with banking supervision , which gave her extensive rights to information and the obligation to license new credit institutions .
In the 1980s, the bank played a key role in various banking crises. The bank was at the forefront when monetary policy returned to being a central part of government policy in the 1980s.
On May 6, 1997, a few days after the British general election in 1997 and Prime Minister Tony Blair's inauguration , Gordon Brown, as the new Chancellor of the Exchequer, announced that the Bank of England would henceforth be operationally independent and thus be able to set the key interest rate itself. In doing so, it is intended to support the government on the way to its target inflation target of a maximum of 2.5%. If the mark is missed by more than 1 percentage point, the bank governor should write a letter to the Chancellor of the Exchequer explaining why and how he intends to remedy the situation.
In 1998 the structure of the bank was changed with the "Bank of England Act". It has since been divided into three main business areas: Currency Analysis and Statistics, Financial Market Operations, and Currency Stability. One department also deals with coordination issues relating to the European Union .
21st century
On May 18, 2006, the bank introduced new instruments for managing the money market. The central new instrument was the introduction of an interest-bearing minimum reserve . Furthermore, two new permanent interest rates were introduced, at which the bank is always ready to accept or lend money; the deposit and marginal lending facilities .
construction
The Bank of England is headed by the Governor of the Bank of England . Since March 2020 this has been Andrew Bailey .
The 1998 Banking Act fundamentally changed the structure of the bank's board of directors. The Board of Directors ( Court of Directors ) should consist of a bank governor, two lieutenant governors and 16 directors. The members of the Board of Directors are appointed by the Crown on the proposal of the Prime Minister. The full-time directors are referred to as executive directors . Part-time directors ( non-executive directors ) are employed by banks, industry or trade unions and are particularly intended to represent economic and social interests. The governor is responsible for central bank policy and has to represent this to the Chancellor of the Exchequer. The Chancellor of the Exchequer himself has the right to give instructions to the Bank of England in order to protect the public interest.
The Banking Act 2009 passed a number of reforms to modernize the Board of Directors. It was also determined that the majority of the members should work part-time. Bradley Fried is the current Chairman of the Board of Directors.
| Surname | function |
|---|---|
| Andrew Bailey | Governor of the Bank of England |
| Bradley Fried | Chairman of the Board of Directors |
| Ben Broadbent | Lieutenant governor (monetary policy) |
| Sir Jon Cunliffe | Lieutenant Governor (Financial Stability) |
| Sam Woods | Vice Governor, CEO Prudential Regulation Authority |
| Sir David Ramsden | Lieutenant Governor, (Financial Markets) |
| Anne Glover | Non-Executive Director |
| Diana Harding | Non-Executive Director |
| Ron Khalifa | Non-Executive Director |
| Diana Noble | Non-Executive Director |
| Frances O'Grady | Non-Executive Director |
| Hanneke Smits | Non-Executive Director |
| Dorothy Thompson | Non-Executive Director |
tasks
| interest rate | height |
|---|---|
| European Central Bank (valid from: September 18, 2019) | |
| Deposit rate (deposit facility) | −0.50% |
| Base rate (main refinancing operations) | 0.00% |
| Marginal lending rate (marginal lending facility) | 0.25% |
| Swiss National Bank (valid from: June 13, 2019) | |
| SNB policy rate | −0.75% |
| Federal Reserve System (effective March 16, 2020) | |
| Federal funds rate target range | 0.0 to 0.25% |
| Primary Credit Rate | 0.25% |
| Bank of Japan (effective December 19, 2008) | |
| Discount rate (basic discount / loan rate) | 0.30% |
| Bank of England (effective March 19, 2020) | |
| Official Bank Rate | 0.1% |
| Chinese People's Bank (valid from: February 20, 2020) | |
| Discount rate (one-year lending rate) | 4.05% |
The Bank of England performs all the functions of a central bank to ensure price stability . Depending on this, it supports the government's economic policy ( Bank of England Act 1998).
The bench
- has the monopoly on issuing banknotes in England and Wales.
- is the state and central bank as well as the bank of banks.
- manages the country's foreign exchange and gold holdings.
- maintains the government property register and budget.
- managed and oversaw the banking sector in a responsible manner until this authority was transferred to the Financial Services Authority in June 1998.
Its Monetary Policy Committee has been setting the official key interest rates since 1997 .
Scottish and Northern Irish banks have the right to issue their own banknotes, but these must be backed 1: 1 by deposits with the Bank of England , with the exception of a few million pounds, which relates to the value of those notes that were in circulation as early as 1845.
literature
- William D. Bowman: The history of the Bank of England from its foundation in 1694 to the present day ("The story of the Bank of England from its foundation in 1694 until the present day"). Schwabe publishing house, Basel 1925.
- Derrick Byatt: Promises to pay. The first 300 years of Bank of England notes . Spink Books, London 1994, ISBN 0-907605-50-8 .
- Philip Geddes: Inside the Bank of England . Boxtree Publishers, London 1994, ISBN 1-85283-203-7 .
- Günther Hausmann: Causes and practical effects of the reform of the Bank of England's central bank policy instruments from September 1971 . Dissertation, University of Würzburg 1977.
- Eugen Philippovich v. Philippsberg: The Bank of England in the service of the financial administration of the state . 2nd edition Vienna: Deuticke 1911.
- Eva Schumann-Bacia: The Bank of England and its architect John Soane . Verlag für Architektur “Artemis”, Zurich 1989, ISBN 3-7608-1011-X (illustrated book).
- Siegfried Wendt: The Bank of England and the English monetary and credit system (study sheet; 8). Lutzeyer publishing house, Bad Oeynhausen 1948.
- Dieter Ziegler : The corset of the "old lady". The Bank of England's Business Policy, 1844-1913 . Knapp publishing house, Frankfurt / M. 1990, ISBN 3-7819-0463-6 (also dissertation, University of Florence 1988).
- Dieter Ziegler: Between Gurney and Baring. The Business Policy of the Bank of England 1867-1890 . In: Scientific Advisory Board of the Institute for Bank History Research (Ed.): Bank History Archive. Journal for banking history , 2/1986, Verlag Knapp, Frankfurt / M.
- Anne Dolganos Picker: International economic indicators and central banks. Wiley, Hoboken, NJ 2007 ISBN 0-471-75113-8 .
Web links
- Bank of England
- Homepage of the museum
- Gold - the secret currency
- Banks (UK) . In: Meyers Konversations-Lexikon . 4th edition. Volume 2, Verlag des Bibliographisches Institut, Leipzig / Vienna 1885–1892, p. 335.
- Early newspaper articles on the Bank of England in the 20th century press kit of the ZBW - Leibniz Information Center for Economics .
supporting documents
- ↑ https://www.bankofengland.co.uk/about/people/governors
- ↑ United Kingdom Foreign Exchange Reserves. In: TradingEconmomics.com. Retrieved January 28, 2017 (English).
- ↑ a b c d History of the Bank of England ( Memento of the original from March 24, 2010 in the Internet Archive ) Info: The archive link was inserted automatically and has not yet been checked. Please check the original and archive link according to the instructions and then remove this notice. . Bank of England website. Retrieved November 25, 2009.
- ↑ Anne Dolganos Picker: International economic indicators and central banks. 2007, p. 15.
- ↑ Bank Lexicon: Concise dictionary for money, banking and stock exchange. 1988, p. 294.
- ↑ a b Silke Gorny: Concise dictionary of economics. 1983, p. 329.
- ^ Josef Kulischer: General economic history of the Middle Ages and the modern age. 1988, p. 350.
- ^ Josef Kulischer: General economic history of the Middle Ages and the modern age. 1988, p. 347.
- ^ Friedrich-Leopold von Stechow: The dissolution of the division of labor in the English banking system. ISBN 3-7908-0129-1 .
- ↑ Hans Egon Büschgen: Das kleine Banklexikon , 1997, p. 164.
- ^ JG Van Dillen: History of the Principal Public Banks. 1964, pp. 209-211.
- ↑ a b c d e f g h Meyers Konversationslexikon, Volume 2: Atlantis - Scarab beetle. 1885, p. 335
- ^ Richard Roberts, David Kynaston : The Bank of England. 1995, p. 226.
- ^ Gunnar Heinsohn, Otto Steiger: Property Economics. 2006, p. 134.
- ^ Eugen Philippovich von Philippsberg: The Bank of England in the service of the financial administration of the state. 1885, p. 41.
- ↑ a b Sabine Lindlbauer: ADAC travel guide plus. 2007, p. 35.
- ^ Richard Roberts, David Kynaston: The Bank of England. 1995, p. 5 f.
- ^ Eugen Philippovich von Philippsberg: The Bank of England in the service of the financial administration of the state. 1885, p. 87 f.
- ^ Richard Roberts, David Kynaston: The Bank of England. 1995, p. 6.
- ↑ a b c d e Silke Gorny: Concise dictionary of economics. 1983, p. 330.
- ^ A b Encyclopedia for money, banking and stock exchange. 1967/68, p. 1654.
- ↑ Dieter Ziegler: The corset of the "old lady". 1990, p. 24 f.
- ^ Richard Roberts, David Kynaston: The Bank of England. 1995, p. 231.
- ^ A b c Encyclopedia for money, banking and stock exchange. 1967/68, p. 1655.
- ↑ Gerhard Müller, Josef Löffelholz: Bank Lexicon. 1998, p. 341.
- ^ Rudolf Beck, Konrad Schröder: Handbook of British cultural history. 2006, p. 151.
- ↑ BBC : On This Day - 1997: Brown sets Bank of England free
- ↑ a b c d Bank of England Act 1998 ( Memento of the original from April 15, 2012 on WebCite ) Info: The archive link was automatically inserted and not yet checked. Please check the original and archive link according to the instructions and then remove this notice. (PDF; 162 kB). Bank of England website. Retrieved November 30, 2009.
- ↑ Kurm-Engels, Handelsblatt, May 18, 2006, p. 27.
- ↑ Jürgen Krumnow: "Gabler Bank Lexicon." 2000, p. 154 f.
- ^ A b Court of Directors website of the Bank of England. Retrieved November 30, 2009.
Coordinates: 51 ° 30 ′ 51 ″ N , 0 ° 5 ′ 17 ″ W.