X. Make comments on the following charts, paying attention to the information given below
The Printing Works of the Bank of England operate in support of the Bank’s first core purpose: maintaining the integrity and value of the currency. The trends of continuously improving productivity and reducing new note unit costs were maintained for the 10th successive year despite increases in pay rates and the cost of materials – mostly paper. Make comments on the following charts.
*The unit cost data are not clearly comparable with the figures for the cost of producing Bank of England notes shown in the statements of account of the Issue Department, since the latter are prepared on a cash basis.
The recent modernization programme – initially of equipment, followed by the major refurbishment of plant and buildings – has now initially bee completed.
Proportion of the Bank’s operating cost
Report & Accounts |
Of equal importance is the continuing Printing Works 2000 Programme which aims to encourage staff to focus on three key values: team working, continuous improvement and customer partnership. Most teams have completed the initial re-design of their working methods and all have transferred to a new pay structure, which rewards the acquisition of skills and demonstration of competencies.
XI. Complete the following sentences using your own words:
If the inflation rate is low, it _____.
The Personnel Division’s purpose is to help the Bank recruit, _____.
Decisions on interest rate policy are made _____.
The Bank of England Act 1946 requires the Bank to pay to HM Treasury, in lien of dividend on the Bank’s capital, a sum _____.
Today the Bank of England, the central bank of the UK, has three core purposes: _____.
Most countries have a central bank: for example the USA (give its name) _____, Germany _____, France _____, Ukraine _____, and Japan _____.
The Bank of England is one of the _____.
Like any other bank, the Bank of England offers _____.
All the clearing banks _____.
The first objective of any central bank is _____.
Interest rates affect _____.
The Bank can try to influence the exchange rate using _____.
XII. Study the text given below and explain in English the meaning of the following words and word combinations: a Stable Financial System
Ensuring a sound and stable banking system is another important central banking function - important in its own right and vital to the efficient conduct of monetary policy. The Bank of England has long recognized this and for many years sought informally to ensure that banks and other City institutions were financially sound and well-run. But it had no legal basis for doing so until the Banking Act of 1979 gave it power to authorize and supervise all deposit-taking institutions. (Building societies, however, are supervised by The Building Societies Commission.) The Banking Act, which was updated and strengthened in 1987, provides that any UK bank wishing to take deposits from the public (that is, to conduct a banking business) in the UK must gain prior authorization from the Bank, and must submit to the continued supervision of its activities by the Bank. Under European legislation this does not apply to the UK branches of banks incorporated in other countries of the European Economic Area. These are supervised by their home state authority,
To become authorized, and to remain authorized, a bank must have adequate capital, and must make appropriate provisions against possible bad debts. The aim is to ensure that there are sufficient resources available to the bank to absorb losses without putting depositors' money at risk. The bank must also have enough ready cash or liquidity, to meet likely withdrawals. The quality of management is very important: directors and senior managers must be honest and competent - fit and proper, in the language of the Act. So must those who control banks - major shareholders, for example. There must be adequate internal systems and controls to enable management to assess their risks properly and to ensure that prudent banking procedures are observed.
The purpose of all this is to protect depositors with banks against the risk of losing their money. But it does not provide a guarantee against loss: to make banking so completely safe would involve preventing bankers from taking any risks at all. Supervision reduces the risk of failure, but does not eliminate it. If an authorized bank does fail, depositors are entitled to limited compensation from a Deposit Protection Fund set up under the Banking Act and administered by the Bank, but financed by contributions levied on the banking system as a whole.
There are about 480 authorized banks in the UK. More than half of these are branches or subsidiaries of foreign banks. The Bank liaises closely with overseas supervisors in monitoring the position of these banks. In recent years the Bank has also played a prominent part in negotiations aimed at establishing common international standards of capital adequacy designed to increase the stability of the financial system of the world as a whole.
The Bank is also involved in the supervision of certain other institutions - primarily those operating as brokers and marketmakers in the professional (or wholesale) financial markets where the Bank itself is active such as gilts, bullion and foreign exchange.
These specialized firms apart, the Bank is not involved in the direct supervision of investment business, which falls under the Securities and Investments Board (SIB) and the self-regulatory bodies which report to the SIB. However, many institutions and groups undertake business which spans both banking and investment activities. In these cases, the Bank co-operates with the SIB and the self-regulatory bodies to ensure a consistent regulatory treatment and a common response in cases of difficulty.
XIII. The teacher asks the students to prepare a role play. One of the students is asked to play the role of chief of Issue Department of the Bank of England and is ready to speak out at one of the staff meetings, on the performance of Issue Department.
The Note Issue
The Bank of England is probably most familiar to the public as the name on the banknotes. The Bank is the sole issuer of currency notes in England and Wales, and although Scottish and Northern Irish banks issue their own notes, most of these must be backed, pound for pound, by Bank of England notes. (Coin is issued by the Royal Mint on behalf of the Treasury, and is not a responsibility of the Bank of England.) The net profits from the note issue (which are considerable) are paid over to the government.
The notes are designed and produced at the Bank's own Printing Works and issued mainly through the commercial banks' branch networks. The Bank itself has only 5 branches (in Bristol, Birmingham, Leeds, Manchester and Newcastle) and these play a part both in distributing new notes and in taking in old notes for sorting and reissue or destruction. The average life of a Bank note ranges from a year for a J5 note to 3-4 years for a J50 note.
Banknotes are printed on special watermarked paper and much technical and design effort goes into making them difficult to counterfeit. The present series of banknotes was introduced between 199o and 1994.
The Bank's notes originally represented deposits of gold coin and bullion with the Bank and until 1931, when Britain finally came off the gold standard, could be exchanged for gold at a fixed rate - hence the words "I promise to pay" on the face of the notes. Since 1844 the Bank has been authorized to issue notes against securities - the fiduciary issue of notes - instead of just gold or silver. After 1939 only a nominal amount of gold was held and today the note issue is wholly backed by securities.