Bank of England

Learn the active vocabulary of the Unit and be ready to use it in your further work.

Treasury Solicitor on behalf of to maintain to be tackled by Court of Directors Deputy Governor sovereign monetary authority the chief functions Treasury bills stocks discount house foreign exchange market to distinguish general oversight headquarters manhunt sole currency Federal funds rate

accepting house note-issuing authority worn notes custodian aid constitute rebate stake intervene bank holiday retail banking bank statement Federal Reserve System operating arms loan facility to be entitled to standing

wholesale banking enactment Federal Reserve Act severe panic moderate Federal Open Market Committee dual mandate to be composed of advisory councils executive or legislative branches current issues outlook depository institutions overseas territories to address the problem

Text A

Pre-reading task:

1. Think and discuss.

∙ What do you know about British banking system?

∙ What British banks do you know?

The Bank of England is the central bank of the United Kingdom and the model on which most modern central banks have been based. Established in 1694, it is the second oldest central bank in the world and the world's 8th oldest bank. It was established to act as the English Government's banker. The Bank was privately owned and operated from its foundation in 1694. It was nationalised in 1946. In 1998, it became an independent public organisation, wholly owned by the Treasury Solicitor on behalf of the Government, with independence in setting monetary policy. The Bank of England is controlled by a Court of Directors made up of the Governor, Deputy Governor and 16 Directors. They are all appointed by the sovereign on the recommendation of the Prime Minister. The Bank of England performs all the functions of a central bank. It maintains price stability, supports the economic policies of the British Government and promotes economic growth. Nowadays the Bank of England is both monetary authority and bank supervisor. The chief functions of the Bank of England are to act as the Government’s bank in the widest possible sense. The Bank does not lend money to the Government. If the Government needs funds it borrows the sums required by issuing Treasury bills or by selling stocks. The bank of England is a banker to the commercial banks and also to the discount and accepting houses. The bank is the central note-issuing authority. New notes are issued and worn notes are withdrawn in very large numbers every day. The bank acts as the Government’s agent for the administration of exchange control and protects the gold and foreign exchange reserves. The Bank of England is custodian to the official gold reserves of the United Kingdom and many other countries. The Bank of England is the fifteenth largest custodian of gold reserves, holding around 310 tonnes. These gold deposits were estimated in February 2012, to have a current market value of £156,000,000,000.