Тhe base of english skills development. Учебное пособие

In England banks developed in the 17th century. Sometimes people deposited their money with goldsmiths for safety. The goldsmiths issued a note promising to pay the bearer a certain sum on demand. In time people began to exchange these notes instead of coins because it was easier and safer. Goldsmiths began to lend the money deposited with them in return for a high rate of interest. They also paid interest to people who deposited money in order to attract their savings.

A group of financiers joined together to provide the money required to set up the bank and loan the government A

The Bank of England is sometimes called the 'Old Lady of Threadneedle Street'. In fact it moved to Threadneedle Street in 1734. Meanwhile the Bank of Scotland was founded in 1695.

However banking crises are nothing new. In 1793, in 1814-1816 and in 1825 there were 'runs' on banks when people lost confidence and tried to withdraw their money. The result each time was a wave of bank failures.

In 1826 the law was changed to allow large banks with many shareholders to form outside London. Many of the small country banks merged with the large banks.

In 1833 banknotes issued by the Bank of England were made legal tender (they must be accepted as payment for a debt).

The Bank Charter Act also forbade new banks to issue bank notes. When banks merged they lost the right to issue bank notes. So gradually the Bank of England became the only bank in England that could issue notes.

At the end of the 19th century and in the 20th century many banks merged until in the late 20th century banking in Britain was dominated by the 'big four', Barclays, Lloyds, Midland and National Westminster.