The Bank of England was founded by whom. The Central Bank of England, its structure and functions

The Bank of England is the oldest central bank in the world. This institution appeared at the end of the seventeenth century - in 1694, as a result of the so-called agreement between an almost bankrupt government and a group of financiers. To wage war with France, the government needed a large loan, for the issuance of which several London merchants united into one private joint-stock bank. As gratitude for the service, they received the right to accept deposits, discount bills, and issue bearer tickets of a single value corresponding to a certain weight of metal.

The war with France (1793-1815) required huge expenses from England, partially covered by loans from the Bank of England and the purchase of foreign raw materials. Foreigners converted banknotes into gold and exported it abroad. As a result, in 1797 the bank's reserves were exhausted and it found itself on the verge of bankruptcy. The government passed a “restriction act” that prohibited the Bank of England from converting banknotes into gold. As a result, the bank's issuing activity increased.

The exchange of banknotes for gold was restored only in 1821. In 1844, parliament legislated for the central bank the function of the exclusive issuer of banknotes.

In 1946 the Bank of England was nationalized. The Bank of England Act was passed, according to which the share capital of the Bank of England was transferred to the Treasury, and the former owners of shares received generous compensation in the form of 3% of government bonds (the exchange of shares for bonds was carried out in a ratio of 1: 4, i.e. in the amount of government bonds 4 times the nominal value of the shares). The Bank of England began to officially act as the government's banker. Under the Bank of England Act, the Treasury may, after prior consultation with the Governor of the Bank of England, make recommendations to the bank which it must comply with. Formally, responsibility for decisions made in the field of monetary policy rests with the head of the treasury, who is accountable to parliament.

The Bank advises the government on monetary policy issues and coordinates these issues with the Treasury. Thus, very broad rights of the treasury in relation to the bank are enshrined in law.

Among the central banks of industrialized countries, the Bank of England is one of the most legally dependent on the government. In practice, the Bank of England works closely with the Treasury and it is difficult to overestimate its role in regulating the monetary and foreign exchange sphere, and in managing public debt.

Bank of England governance structure

- Bank manager (for 5 years)

- his deputies (for 5 years)

- 16 directors (for 4 years)

Officially appointed by the Queen, but actually nominated by the Chancellor of the Exchequer in consultation with the Governor. The manager and his deputies are appointed for 5 years, directors for 4 years. 4 of 16 directors are replaced annually. 4 executive directors work in the bank on a permanent basis, the remaining 12 represent commercial banks and industry.

The Board of Directors holds weekly meetings, but does not participate in political decisions. The activities of the council are aimed at ensuring that the opinions of various circles are taken into account.

According to the law, the government has the right to release employees from management positions before a specified period. This practice has never been applied to the manager. The Bank of England is not an independent central bank and reports to the Chancellor of the Exchequer, who is responsible to Parliament for monetary policy. The formal dependence of the Bank of England on the Ministry of Finance seemed to experts to be the main obstacle to joining the European Monetary Union.

In 1979 - the first English comprehensive banking law. He assigned the Bank of England the right to supervise the banking system. To create a depository institution, permission from the Bank of England is required. In 1987, the Bank of England received additional rights and responsibilities for banking supervision. However, a decade later, in 1997, the banking supervision function was transferred to another newly created supervisory authority.

Currently, the Bank of England operates based on three priority goals:

1- support for the value of the national currency

2 - ensuring the stability of the financial system

3 - ensuring and increasing the efficiency and competitiveness of the financial system within the country and in the international arena.

Functions:

1- provides a range of services to its clients.

However, the clients of the Bank of England are different from those of other banks. There are 3 most important groups of clients:

Commercial banks. All clearing banks have accounts with the Bank of England. They are required to have a certain amount in the account and are not allowed to exceed it. All banks operating in the UK keep 0.35% of their deposits in an account with the Bank of England. This reserve rate is the main source of income for the Bank of England.

Central banks of other countries - have accounts and hold gold in England, can conduct business in London through the Bank of England.

Government - all payments, taxes to the budget and payments from the budget go through the Bank of England accounts.

In this role, the Bank of England acts based primarily on tradition rather than legal norms. Various rules and procedures that regulate the activities of credit and banking institutions are established as “gentlemen's agreements” between these institutions and the Bank of England.

In line with the above, the Bank of England has a threefold role:

1. Serves as a bank for commercial banks

2. serves as a bank for other central banks

3. serves as a bank for the government

2- implements monetary policy, the main goal of which is to achieve price stability.

Inflation is maintained at 2.5%. The policy of interest rates and interventions is used. The interventions are openly discussed and widely publicized.

The conduct of monetary policy, that is, the determination, mainly, of the level of interest rates that ensure the achievement of inflation goals, is entrusted to the Bank of England and the Treasury (the Bank of England, unlike other banks, cannot act independently of the government). The Bank of England Act of 1946 gives the Treasury the power to give directions to the Bank of England and, although the Treasury has never exercised this power, the relationship between the two is such that the final decisions on interest rates are made by the Chancellor of the Exchequer. However, the Bank of England plays a very important role in the decision. The Bank of England now publishes a quarterly Inflation Report, which contains a detailed analysis of the information, as well as the minutes of the meeting between the Minister and the Governor of the Bank (published 6 weeks after their meeting) regarding interest rates.

The main instruments of monetary policy changed depending on the state of the national economy and political priorities.

In the 40s, monetary policy, in accordance with Keynesian ideas, was considered as an addition to financial policy and was aimed mainly at maximizing the cost of public debt: a policy of “cheap money” was pursued, i.e. keeping loan interest rates low.

The Bank of England did not use such a traditional method of regulation as changing the discount rate. The main instrument of monetary policy was the establishment of a fixed ratio of cash reserves to bank deposits and open market operations.

In the 50-60s, the features of the monetary control mechanism were frequent changes in the official discount rate, tightening or weakening of direct restrictions on bank loans, depending on the state of the economic situation, the state of the balance of payments, and the scale of inflation.

In 1971, the Conservatives who came to power proclaimed a “new approach” to monetary regulation. Direct credit restrictions were abolished and measures were taken to increase competition in the banking sector. This was accompanied by a sharp increase in the money supply and prices. The Bank of England returned to the active use of previously used direct methods of limiting credit; In addition, limits were set on the growth of the money supply, and a number of measures were taken to stimulate the placement of government debt obligations outside the banking system.

With the coming to power of the conservative government of M. Thatcher in 1979, the direction of monetary policy began to be determined by the deviation of the growth rate of the money supply from the established limits. The main method of control by the Bank of England over the growth of the money supply was its operations for the purchase and sale of bills, mainly commercial bills, not treasury bills, and the placement of government obligations outside the banking system.

In the 90s, the main instrument of monetary policy in the UK, as in other developed countries, was open market operations.

3- is an issuer of banknotes.

The Bank of England has been issuing banknotes for over 300 years. Banknote design and production is a function of the bank's Essex printing plant. The bank supplies 5 of its branches with banknotes - in Bristol, Birgingham, Leeds, Manchester, and Newcastle.

Since 1844, the Bank of England has been divided into two departments:

Emission, associated only with the issue of banknotes and

Banking, which carries out all other operations.

This division was made for accounting purposes. Banknotes issued by the issuing department are transferred to the banking department, where they are kept as a reserve until they are needed by customers. The issue of banknotes is entirely fiduciary, i.e. secured not by gold, but by various obligations.

In addition, the Bank of England also performs the following functions:

4 - carries out foreign exchange transactions and control, management of the country’s gold and foreign exchange reserves on behalf of the Treasury

5 - supervises credit institutions, foreign exchange and credit markets, and the banking system in general

6 - collects statistical information on the money supply and the activities of banks

The Bank of England has 12 territorial branches.

There are some discrepancies in the literature regarding what is considered the first central bank. Some authors call the Bank of Sweden, founded in 1668, such. Others believe that this is the Bank of England, established in 1694. We will focus on the second of these institutions, since the influence of the Bank of England on the development of the international financial system is incomparably greater. First, the Bank of England model has been used by many other countries to create their central banks. Secondly, at some periods in history, the Bank of England turned out to be the center from which the world financial system was controlled.
To understand where the Bank of England came from, it is necessary to make a small general digression: the creation of central banks in many
countries were preceded by bourgeois revolutions, and these revolutions were in one way or another provoked by moneylenders, whom monarchs prevented from engaging in their interest-bearing business.
The background to the creation of the Bank of England is as follows.
Under the influence of the Reformation, which was just beginning to unfold in Europe, the English king Henry VIII (1509-1547) significantly weakened the laws regarding usury. In the first half of the 16th century. Moneylenders significantly expanded the supply of gold and silver coins, and the country experienced a revival of economic activity. But then Henry VIII’s daughter, Queen Mary Tudor (1553-1558), came to power and again tightened the usury laws. The supply of coins decreased significantly, and a depression hit the country. After a five-year reign, power passed from Mary to her sister, Queen Elizabeth I (1558-1603). In order to put the disordered economy in order in the country, she decided to take control of the issue of money into her own hands. First of all, the Queen decided to make the minting of gold and silver coins the exclusive prerogative of the Royal Treasury. The need for moneylenders has sharply decreased, and the interest on their loans has become minimal. Queen Elizabeth I entered into direct confrontation with the moneylenders, and the latter began to prepare a revolution, making Oliver Cromwell their protege. It all ended, as we know, with the overthrow of King Charles I, the dissolution of parliament, and the execution of the monarch. Of course, these events cannot be explained solely by the fact that the royal power took control of coinage, but this is an important reason for the English revolution. James Stuart (1685-1688) was placed on the throne. A civil war began in the country, which did not give the moneylenders the opportunity to fully establish their power.
And then William (William) of Orange appears on the scene - a reliable protege of the moneylenders. According to historians, his rise to power was supported by Dutch and English moneylenders. The Stuarts were dethroned, and James's place was taken by William of Orange, who became known as William III (1688-1702). On behalf of and on behalf of a group of moneylenders, negotiations with the new king were conducted by the then-famous swindler William Patterson (before that, he tried to make a lot of money by colonizing the Isthmus of Panama, but to no avail). For their “service” in providing a loan, they demanded a counter “service” from William of Orange:
firstly, agree to the creation of a special bank, which would be a monopoly issuer of paper money circulating throughout the country;
secondly, this bank was supposed to become the exclusive creditor of the government, issuing loans at 8% per annum in exchange for government IOUs (bonds);
thirdly, allow the bank to partially reserve its obligations, i.e. actually allow you to make money “out of thin air”;
fourthly, it was proposed to make the main “reserve” of the bank not gold, but government bonds; the latter should ensure full government lending, as well as the issuance of other loans.
In fact, Paterson’s “project” contained all the basic elements of the modern mechanism for issuing money by central banks of developed countries (except that the “project” also included the use of gold, although its role was already secondary).
Basically, all the demands of the moneylenders were satisfied (although not completely - for example, the rights to issue national money were retained by other banks).
This is how the Bank of England arose, and it had the right to issue credit money (paper pounds sterling) twice as much as there was gold in its vaults. In the first year, the Bank of England issued a loan to the king in the amount of 1,200,000 pounds sterling, with the presence of gold in the bank's vaults worth 720,000 pounds sterling. Loans to the government and interest on them were repaid through taxes. This system suited both the moneylenders - shareholders of the Bank of England, and government officials, because they gained access to a constant source of credit. Under this system, profits to Bank of England shareholders and government debt grew rapidly. The system gave rise to unlimited corruption and contributed to the merging of the financial power of moneylenders and the “administrative resource” of government officials. The only losers were the English people: they bore the tax burden generated by the debt. In addition, he bore all the brunt of the crises that were inevitable with the rapid growth of debt. Finally, it must be taken into account that part of the Bank of England loans was not backed by either gold or goods. Therefore, contrary to the established ideas that “there could be no inflation in those days,” there was a rise in prices in the country, which primarily hit ordinary Englishmen. The “flight” from the paper pound into gold began. Therefore, already in 1696, the king passed a law prohibiting the Bank of England from paying “in kind,” i.e. gold. Thus, just a few years after the founding of the Bank of England, the mechanism for issuing money became what it is today in the USA and other developed countries.
Very soon, however, the “glorious time” ended for the government: debts grew so rapidly that there were no longer enough taxes to service and repay them. The only way for the authorities to get out of this “deadlock” was to start a war. Indeed, a series of wars began in England for the seizure of colonies and world dominion. The result was an even greater weakening of the authorities while simultaneously strengthening the position of shareholders of the Bank of England and other moneylenders. At the end of the 18th century, the Bank of England's gold reserves were so depleted by the war that in 1797 the government banned all payments in gold.
In 1816, after the Napoleonic Wars, a gold standard was introduced in England, which provided for the free exchange of paper pounds for the yellow metal by the Bank of England. However, the latter immediately began to issue significantly more banknotes than there was gold in its vaults, which contributed to the crisis of 1825. After this, a fairly influential group of supporters of “curbing” the issuing activity of the Bank of England appeared in England - the so-called “monetary school”, whose representatives believed that the crisis of 1825 arose due to the “severance” of the issue of money by the Bank of England from its metallic stock. And besides, they remembered the sad experience of King William in actually “disconnecting” the issue of money from gold, which ended in rampant inflation at the end of the 17th - beginning of the 18th centuries.
Representatives of the “monetary school” were opposed by the so-called “banking school,” whose ideologists believed that the issue of money by the central bank should not be determined by gold reserves, but should be linked to the economy’s needs for money. This linkage should be ensured by the issuance of banknotes secured by bills of exchange, i.e. ultimately goods. Without going into details of the then discussion between the two schools, we note that it affected only the activities of the Bank of England, and almost no one remembered the full reservation of commercial banks.
In 1844, another milestone was crossed in the development of the Bank of England. We have already mentioned above that in this year the so-called Peel Act was adopted, which introduced a number of innovations into the activities of the country’s central bank.
Firstly, it was established that the Bank of England would receive exclusive rights to issue banknotes in the country. At the same time, however, other banks were not deprived of the right to issue, but the maximum volume of their issue was fixed at the level of 1844.
From this moment on, the Bank of England actually received the right to 2/3 of the entire issue of banknotes in the country, and every year this share increased. Other banks gradually “left the game”: from 1844 to 1921. All banks stopped issuing activities except the Bank of England (207 private banking houses and 72 joint-stock banks). This did not mean, of course, a weakening
positions of other credit institutions. Many of them continued to increase their capital and assets. But now they began to engage exclusively in issuing non-cash (deposit) money.
Secondly, the high level of gold coverage of banknotes issued by the Bank of England was determined. To a certain extent, the step to ensure a high degree of gold coverage of the issue was not only an internal matter for the Bank of England. After all, it was Great Britain that initiated the introduction of the gold standard throughout the world, and it had to show by its own example what a real gold standard is.
At the same time, it should be noted that the Peel Act was repeatedly suspended until the abolition of the gold standard in 1930, which made it possible for the country's central bank to significantly increase the issue of paper money.
Concluding the conversation about the Bank of England, it should be said that from the very beginning it was a private enterprise, owned not by the state, but by individuals. Among the founding shareholders were the King and Queen, who made a down payment of £10,000. Then another 633 people contributed amounts of more than £500, which gave them the right to vote at shareholders' meetings. In 1946, i.e. two and a half centuries after its creation, the Bank of England was nationalized by the Labor government (by the way, the list of shareholders still remains secret). Even earlier, in 1931, when England abolished the gold standard, the Bank of England's gold reserves were transferred to the Treasury (Ministry of Finance). However, today the Bank of England is de facto controlled not by the government, but by private banks in the City of London: “The Bank of England has been and continues to be a private bank pursuing the interests of a specific, very narrow group of individuals.”

The Bank of England is the oldest central bank in the world, which appeared four centuries ago in England, as a result of the so-called deal between a nearly bankrupt government and a group of financier creditors. By the end of the 17th century. England was on the verge of financial collapse. 50 years of almost continuous wars with France depleted the country's economy.

Then government officials entered into negotiations with financier-creditors in order to obtain the sums of money necessary to continue the previous policy course, i.e. financing a military company. Scottish financier William Peterson proposed a completely new plan to the government on behalf of his financial group. In exchange for certain privileges from the state, Peterson proposed creating a bank that would issue new banknotes and cover the deficit. Thus, the Bank of England was founded by an Act of Parliament on July 27, 1694. The bank initially had 19 employees. The Bank's capital represented Britain's first government debt. The bank operated as a joint stock company with 1,268 shareholders. Like any private bank at the time of its establishment, it placed its shares on the market. The investors, whose names were never made public, were required to pay £1.25 million in gold per share. However, in reality the first payment was £1,200. Art. and a total of £750,000 was paid. This caused a surge in inflation, and within two years the Bank was completely insolvent, which gave certain advantages to private jewelers. Bank of England notes could be freely exchanged for circulating metal coins. In 1696, the Bank of England, run by magnates from the ruling Whig political party, faced the threat of competition. The Tory Party attempted to establish a new National Land Bank, although this venture failed. The Bank of England immediately took action. The following year, 1697, Parliament passed a law prohibiting the establishment of large banks in England and gave the bank a monopoly right of issue in London. Under the same law, counterfeiting Bank of England notes was punishable by death. In 1708 the law became even more stringent. It has now become illegal to issue bearer bills (this right was given only to the Bank of England) and to create companies consisting of more than 6 people (partners), as well as to provide short-term loans for a period of up to 6 months. Thus, small banks with less than seven private owners could become competitors of the Bank of England.

Despite these conditions, the Bank of England still faced strong competition from the Tory party during Queen Anne's reign. In 1711, the South Sea Company was created, headed by Prime Minister Robert Harley, which became a strong competitor to the Bank of England, but it went bankrupt within nine years. This bankruptcy exposed the Bank of England to pressure from depositors, and the bank was given the power to suspend coin payments. The Bank of England was subjected to a similar onslaught during the accession of Bonnie Prince Charlie to the throne in Scotland, when the Bank of England again suspended payments. In 1734 the Bank moved to a purpose-built building on Threadneedle Street in the center of the City of London. He later received his nickname from the name of this street: Old Lady of Threadneedle Street. In the second half of the 18th century, private banks appeared that issued bills. By 1793 there were about 400. The financing of the generation-long wars with France that began in the 1790s led to the suspension of coin payments by a third of the banks of England in 1793, and then by the Bank of England itself in 1797. Later other banks joined them. This suspension lasted 24 years until the end of the war with France. During this period until 1821, Bank of England notes served as real money (although not yet legalized), and after 1812 until the end of this period they became legal tender. As one might expect, a number of unreliable banks appeared during this period. In 1797 there were about 280 "country" banks in England and Wales, and by 1813 the number exceeded 900. By 1816 the total number of bank notes was 24 million pounds sterling, doubling the 1797 figure.

This period could not but affect the state of affairs of the Bank of England. Its income declined, and when payments resumed in 1821, the Bank's shares fell 16%. In 1826, the so-called Country Banker's Act of 1826 was issued, which limited the Bank's monopoly on the printing of banknotes to an area within a radius of 65 miles from London and allowed the creation of other banks outside this region, which could also issue their banknotes. At the same time, this act allowed The Bank created its branches in all regions of England. In 1844, the country's Parliament passed a law (Robert Peel Act), according to which the Bank of England was legally assigned the function of the exclusive issuer of banknotes. The 1844 Act established the amount of money supply expressed in banknotes and not backed gold coins or gold bars stored in the Bank of England's vault. This would prevent excessive issue of banknotes, which would help to adequately meet the needs of the economic system in the money supply. This development led to the fact that the issue of banknotes began to be separated from other commercial activities of the bank (e.g. lending against collateral such as land holdings), which was gradually reduced, and the Bank of England became more and more central bank-like in character. Currently, the activities of the Bank of England are regulated by the Bank of England Act adopted in 1946. Under this law, the share capital was transferred to the Treasury, and its former owners were generously compensated in the form of government bonds, which amounted to four times the par value of the shares. The bank thus did not become part of the government apparatus, but was empowered to request information from bankers and make recommendations to them. With the approval of the Treasury, the Bank of England could issue directives to any bank to ensure compliance with such recommendations or requests.

The law gave the government the right to appoint the board of the Bank of England consisting of: a governor and his deputy, appointed for a five-year term, and 16 directors. Directors are appointed for a term of four years, with 4 of the 16 directors being replaced annually. Four executive directors work for the Bank on a permanent basis, and the remaining 12 represent commercial banks, industry, academia, and trade unions. On 4 April 1979, England's first comprehensive banking act received Royal Assent and came into force on 1 October 1979. The Act gave the Bank the rights and responsibilities to supervise the banking system. Since 1 October 1979, the establishment of a depository institution to which the Act may apply requires the prior approval of the Bank of England. This requires the provision of detailed statistics on activities to determine compliance with the information on those responsible for conducting them. Where the applicant institution has its principal activities outside the UK and raises deposits through a branch in the UK, the bank must obtain confirmation from the relevant foreign supervisory authority that it is satisfied with the management of the bank and its overall financial strength. In 1987, the Bank of England received additional rights and responsibilities for banking supervision. However, a decade later in 1997, the regulatory authority.

1. History

2. Management structure

3. Functions

Central Bank of England- was originally organized in 1694 as a commercial bank, and only after nationalization in 1946 became “a public organization wholly owned by the government.

Central Bank of Great Britain - Central Bank of England. Bank was founded in 1694. Located at the center of the financial system Britain, bank supports and promotes the development of currency and monetary stability in the country.

Story

Located on one of the oldest streets in London, where a tailor's workshop was located in the 17th century, on Threadneedle Street, which translated into Russian means “sewing needle”, literally “for thread”.

That is why it received the humorous name "The Old Lady" of Threadneedle Street. Later, a monumental building was built in the form of a single stone block. The bank has always been under intense surveillance: it is surrounded by bars and constantly guarded. No one except employees has access to the building, and there are no photographs showing the inside of the building. All this is done solely for the safety of the bank.

For three hundred years, along with providing banking services to clients, the bank was engaged in the control of gold reserves United Kingdom of Great Britain.

Central UK strengthens the financial system of the state and monitors the state of the economy in the country, it is able to prevent recession and restore stability in the event of regression.

The Central Bank of England itself, as a financial institution, was created in 1694 and at first was not located here, but at the end of the 18th century it received a plot of almost two hectares. The building was built according to the design of the architect John Soane, who made it completely silent and at the same time did not miss the opportunity to surround it with a lattice. The reason is clear: impressive sums were kept behind this wall.

Not only did the huge windowless building not look the most attractive, until recently it was guarded day and night by special guards, and only in recent years they were replaced by an electronic security system.

Although today the City is built up with huge high-rise buildings and continues to grow upward, the building of the Central Bank of Great Britain still makes a strong impression, perhaps precisely because it looks like a single stone block.

New banks typically try to appear approachable to customers and have walls made of glass. The technology for constructing safes has come a long way, and today blank walls are no longer required.

For security reasons, outsiders are still not allowed into the British Central Bank. And it’s quite difficult to find photographs of the bank’s interior. The John Soane Building was completely rebuilt by Sir Herbert Baker between 1925 and 1939, but Soane's blank wall was retained.

No one except the employees knows what is behind this wall. Perhaps this is why various legends are formed around the building about ghosts who have settled in the bank. And although ghosts are a common thing in the UK, bank ghosts are out of the ordinary.

The first of the ghosts is a man who worked in a bank in the 18th century and was more than two meters tall. Fearing that his height would cause his grave to be dug up and his corpse removed for vivisection, he sought assurances that he would be buried within the bank's walls, in a small courtyard. Nevertheless, his grave was opened and, indeed, an unusually large coffin was discovered. After that the ghost disappeared.

But the main banking ghost is the Black Nun. His story, according to Peter Underwood, is as follows. In 1811, one of the bank employees, Peter Whitehead, got carried away with a card game, lost and made two counterfeit checks to cover the debt. His friends betrayed him, after which he was arrested, tried and executed.

However, for a long time his sister was not told what was wrong with him and why he did not return home from work. When she found out the truth, she became slightly insane and began to wander near the bank. The bank employees got her a tiny pension. For forty years this woman, dressed in black (hence the “nun”), visited the area around the bank, gradually turning into an old woman. Some believe that the bank owes its nickname to her. Rumor has it that her shadow flickers in the corridors of the bank to this day.

It remains to add that in the main entrance the floor is decorated with mosaics work Russian artist Boris Anrep.

Management structure

The Central Bank of England is governed by a Board of Directors. The Council consists of the Governor, his two deputies (Deputy Governors) and 16 Council members (Non-Executive Directors). All of them are appointed by royal decree after approval by the Parliament of England

The head of the Central Bank of England is manager, who is a member of the directorate, which also includes 16 other directors (they are appointed by the government for three years). 4 directors are on the bank's staff, and 12 are heads of large companies. The government appoints manager jar. Its service life is five years. The Directorate must meet at least once a month and resolve issues related to work jar.

All practical matters are discussed by the Treasury Committee, consisting of the manager, his deputy and five directors.

The manager and his deputies are appointed for five years, members of the Board of Directors - for three years. All of them can be appointed for subsequent terms.

The Board of Directors must hold its meetings at least once a month, and its competence includes all issues of bank management, except for issues of monetary policy, which are dealt with by a special Committee on Monetary politics(The monetary policy committee, MPC).

The Governor of the UK Central Bank is also the head of the Monetary Committee politics. The remaining members of the Committee are selected from well-known economists, and not from bank employees. Currently, this is the Governor of the Central Bank of Great Britain, Mervyn King.

Functions

The Central Bank of Great Britain performs all functions central bank. The most important of them are to maintain price stability and support the Government's economic policy to ensure economic growth. To this end, the bank solves problems in the following key areas:

Maintaining stability of the exchange rate and purchasing power of the national currency (Pound sterling)

Stable prices and trust in national currency are two main criteria for monetary stability. Stability prices is supported by the confidence that prices are rising in accordance with the inflation parameters set by the Government. The Bank seeks to solve this problem by changing interest rates, which are determined by the Monetary Policy Committee of the Central Bank of England.

Maintaining the stability of the financial system, both national and global.

Ensuring financial stability involves protecting against threats to the entire financial system. Threats are investigated by supervisory authorities and analytical services of the bank. Threats are eliminated through financial and other transactions, both in the national market and abroad. In exceptional cases, the bank may act as a “borrower of last resort”.

Ensuring the efficiency of Britain's financial sector.

The Bank cooperates with a number of other institutions to ensure both monetary and financial stability, including:

England (HM Treasury).

UK Financial Services Authority.

Other central banks and international organizations, with the aim of improving the international financial system.

In 1997, a Memorandum of Understanding was signed between the Central Bank of Great Britain, treasury and the Financial Conduct Authority, which describes the terms and principles of interaction between these organizations to achieve the common goal of enhancing financial stability.

The Central Bank of Great Britain has a monopoly on the issue of banknotes in Great Britain and Wales. Banks in Scotland (The Royal Bank of Scotland, The bank of Scotland and The Clydesdale bank) and Northern Ireland (bank of Ireland, First confiding propert bank, Northern bank and Ulster bank) retained the right money issue own banknotes, but their money issue must be backed by a 1:1 deposit with the Central Bank of Great Britain, with the exception of the few million pounds they had in circulation in 1845. In 2002, the Bank decided to sell its printing businesses banknotes De La Rue organization.

Since 1997, the Monetary Policy Committee has been responsible for setting official interest rates. However, along with the decision to grant the bank operational independence, in 1998 responsibility for managing the state debt was assigned to the new structure of the Department for Public Administration debt England (UK debt Management Office), to which management functions were also transferred in 2000 debt Government funds. Since 2004, the functions of the registrar for British Government bonds (also known as British government bonds (Gilts)) have been transferred to companies computershare.

Sources

en.wikipedia.org

Investor Encyclopedia. 2013 .

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Central bank- an intermediary between the state and the rest of the economy through banks. As such an institution, it is called upon to regulate cash and credit flows using instruments that are assigned to it by law. In various... ...Wikipedia

As always happens in times of global instability, streams of propaganda begin to pour on us, that is, on ordinary citizens, which are designed to confuse us and set us up for certain actions that we must perform in the selfish interests of manipulators. And the economy occupies a central place in this stream of propaganda, because the well-being of everyone directly depends on its condition. I propose to begin expanding our knowledge in the field of economics by studying how the national currency is issued in Great Britain, because it was from this country that the “fashion” for central banks officially independent of the state began.

As is usually the case with England, the financial situation in this country is very, very complicated. Officially, a total of 8 (!!!) banks have the right to issue pound sterling:

1. Governor and Company of the Bank of England - the Bank of England itself.


2. The Royal Bank of Scotland - Royal Bank of Scotland.


3. The Bank of Scotland - Bank of Scotland.


4. The Clydesdale Bank - Clysdale Bank (Scotland).


5. Bank of Ireland - Bank of Ireland.


6. First Trust Bank Allied Irish Banks - First Trust Bank (Ireland).


7. Northern Bank - Northern Bank (Ireland).


8. Ulster Bank - Bank of Ulster (Ireland).

Bank of England stands above everyone, so I suggest starting your study with it. This bank was founded in 1694 as a private bank. In 1946 the Bank of England was nationalized . In 1997, the Bank of England was given the status of an independent public body, but whose sole owner is the Solicitor of the Treasury on behalf of the Government. The Bank is governed by a Board of Directors, whose members are approved by the UK Parliament and then appointed by royal decree. It is worth noting that in England the key rate is set not by the Board of Directors of the Central Bank, but by the Monetary Policy Committee of the Bank of England, which includes 5 representatives from the Central Bank and four independent experts (i.e., if necessary, the necessary decision can be made employees of the Bank of England). Control of the financial sector on the Island is carried out not only by the Bank of England, but also by the Treasury and the UK Financial Services Authority. This is such an explosive mixture. But, if we look closely, we can see that everything and everyone is drawn to... the Royal Court, i.e. to the head of Great Britain. Is it possible to talk about the Bank of England as a “private” shop if the head of state skims the brunt of it?

The Royal Bank of Scotland also a very, very interesting structure. It itself belongs to RBS Group, 81% of whose shares, according to somewhat murky schemes, belong to the UK Treasury. It turns out that in fact the bank also belongs to the British crown. A small digression: before leaving the Russian market, this bank had representative offices in Moscow, St. Petersburg and Yuzhno-Sakhalinsk(were there any ties?). At the same time, this bank has assets worth more than 1 trillion pounds sterling (approximately 85 trillion rubles at the current exchange rate). Colossal sizes.

The Bank of Scotland no less interesting structure. Included in Lloyds Banking Group. In this banking group, about 17% of the shares belong to the same UK Ministry of Finance. The Internet is full of rumors that this bank is a “pocket bank” for the Rothschild family. In principle, this is not excluded, because during the 2009 crisis, the British Government helped Lloyds very well, and then for some reason began to get rid of its shares, although the state does not even plan to reduce its stake in RBS Group.

WITH The Clydesdale Bank It's not that simple either. In 1987 it was bought by National Australia Bank. Judging by how aggressively the Australian bank has been buying up financial structures in recent years, it can be assumed that behind it are very, very influential financial structures that are transporting their capital to warmer climes. It is worth noting that the issue of this bank in 2009 helped to get out of debt to the two above-mentioned Scottish banks. In addition, this Australian financial institution is headed by financiers who received their education in the UK.

Today, the issue of Scottish banks is regulated by the Bank Notes (Scotland) Act 1845, according to which, when issuing pounds, banks must provide reserve deposits with the Bank of England in a ratio of 1:1. This limitation does not include emissions in the amount of assets that banks had in 1845. What were the size of the assets? History is silent about this. It is alleged that today there are about 4 billion pounds (about 400 billion rubles) in circulation, printed by Scottish banks.

Bank of Ireland was founded in 1781. Actually, everything else about this bank is unknown. Commercial Bank? Yes. Who owns it? Silence. The only thing that can be said about him is that today the Bank of Ireland is headed by Richie Boucher, who comes from The Royal Bank of Scotland. In my opinion, a very interesting appointment.
First Trust Bank Allied Irish Banks belongs to one of the largest banks in Ireland: one of the founders of Danske Bank was Northern Bank itself. Apparently, in 2004, due to the change in the places of the terms, the main owner and beneficiary did not change.

WITH Ulster Bank everything is very simple: it belongs to the RBS Group, i.e. UK Government.

What can ultimately be said based on all of the above? Firstly, the UK pound system is complex. Very. Secondly, the financial management system in the UK is no less complex than the issue. Thirdly, only those who do not really understand what is “private” and what is “state” property can call the Bank of England a “private shop”, or those who, for some personal reason, do this on purpose. To put it more clearly, the English financial system today is governed by a “gentleman's agreement” between the state and financial corporations, which appears to benefit both parties. If for some reason this agreement becomes a burden for one of the parties, then breaking it is a matter of technology (the example of 1946 is very indicative).

By the way, if you look closely, then according to one scheme or another, almost all financial threads go to the British monarchy. That's the kind of free market there is. And his hand.