Bank of England: Known as the Old Lady of Threadneedle Street

Topics: Central bank, Monetary policy, United Kingdom Pages: 3 (1089 words) Published: February 17, 2013
Bank of England

I. Brief presentation

Founded in 1694, the Bank of England, known as the old lady of Threadneedle Street (the street in City area where it was founded), is the government's bank and the UK's central bank. It issues bank notes, controls the UK gold reserves and, since 1997, has set official interest rates ; maintains the stability of the financial system by monitoring and analyzing the behavior of participants in the financial system, and the financial and economic environment; and offers technical assistance and advice to other central banks, through its center for Central Banking Studies. Lender of last resort: In case of major systemic threat (Financial crisis for example) the bank stands ready to lend to banks and other financial institutions when financial panic threatens. Acting as s the banker to the government, the bank ensures that the government can meet its payments when running a budget deficit setting monetary policy to control inflation more of this later.

The Bank is the second oldest central bank in the world after the Swedish Riksbank, which was founded in 1668. The need for a central bank in England was seen by a Scotsman, William Paterson, who noticed that the nation's finances had been in disarray and had no real system of money or credit. He led a successful scheme in which £1.2m was loaned to the government from funds raised by subscribers who, in return, were incorporated into the governor and company of the Bank of England. The Bank was established as a commercial operation but also secured large government accounts, becoming the government's banker and debt manager. It survived the South Sea Bubble crash of the 1720s, when smaller banks went to it to be bailed out, and it developed into "the lender of last resort". During the Gordon Riots of 1780, the Bank came under threat from a mob. The government established an overnight military guard for security, known as the picquet and drawn from the Coldstream Guards,...
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