Activities:
Provides credit cards for
customers
Provides personal loans for
customers
Currency exchange for
people travelling
Mortgage lending for people
to buy homes
Provides savings and current
accounts for individuals
Arranges overdraft facilities
for customer accounts
Activities:
Advise businesses wanting to
borrow money in bond
markets (debt)
Activities:
Provides a depositors’ protection
scheme
Issues notes and coins
Advise businesses wanting to
issue shares (equity)
Advise businesses on strategy
and growth (Mergers and
acquisitions)
Advise businesses on strategy
and growth (Mergers and
acquisitions)
Buy and sell financial assets to
make a profit
Acts as a banker to the banking
system i.e. Commercial banks
Acts as a banker to the
government
Regulates the domestic banking
system
Holds the nation’s gold and
money supply
Influences the value of a nation’s
currency
Sets the official short-term rate of
interest (base or bank rate)
Manages the national debt
Controls the money supply
Monetary and Fiscal Policy
Monetary
Policy
Fiscal
Policy
Adjusting interest rates (to control inflation)
and the money supply to manage fluctuations
in economic activity. Monetary policy is often
the responsibility of a country’s Central Bank.
Governments attempt to manage fluctuations
in economic activity through taxation and
expenditure. These measures are known as
stabilisation policies categorised as fiscal
policy.
Central Banks – The Bank of England (BoE)
Background
•
UK Central Bank – Threadneedle Street, London
•
Founded in 1694
•
Since 1694 – banker to the government
•
Since the late 18th Century – banker to the banking system
•
Manages the UK foreign exchange and gold reserves
•
It does NOT :
• manage the National Debt (This is the Debt Management Office in the UK)
• provide a depositors protection scheme (This is the Financial Service
Compensation Scheme in the UK)
The Bank of England
Strategic Priorities
•
•
•
•
•
•
•
The MPC’s main focus is to meet the
inflation target set by the Chancellor
each year.
The MPC holds monthly meetings
Gauges all factors that influences
inflation:
 Exchange rates
 Rate of economic growth
 Consumer borrowing and spending
 Wage inflation
the MPC makes a decision about
whether to raise or lower the ‘base rate’
of interest based on the factors above.
Established in June 2011 as a response to
the 2007/8 financial crisis.
Monitors the stability and resilience of the
UK financial system and its powers to
tackle risks.
It gives direction and recommendations to
the Prudential Regulation Authority (PRA)
and the Financial Conduct Authority (FCA).
UK
Russian
Federation
6.25%
3%
The structure of the Bank of England
Bank of England controlled by the Board of Directors . It
consists of :
The Governor ( term of office - 5 years ) - is in charge of all
of the Bank and appointed by the Government;
(Mark Carney)
Two deputy governor ( term of office - 5 years ) ;
16 Board member ( term of office - 4 years, renewable ) .
At the same time 12 members are the heads of the largest
companies in the country , as part of the 4 members of the
staff of the Bank.
What does the Bank of England do?
The Bank of England is the UK’s central bank. Their mission
is to promote the good of the people by maintaining
monetary and financial stability.
The “Old Lady”
Political Ravishment or The Old Lady of Threadneedle Street in danger.
By James Gillray. Published 22 May 1797.