Bank of England: history and description

Among all the central banks of Europe, the Bank of England holds a special place of honor, and there are very good reasons for that. In fact, he is twice the champion. In addition to being much older than all other European state-owned banks, it is still the oldest financial institution in the whole of Foggy Albion. Not for nothing did they come up with the playful name of "The Old Lady", hinting at his conservatism in this way.

How and when the Central Bank of England was founded

The history of this organization begins in 1694. At that time, the government and the King of England needed a loan to finance the war against France. One Scottish financier, whose name was William Peterson, came up with the idea of creating a special financial institution that would print new banknotes and thus cover the budget deficit. As a result, a joint-stock company was created, with approximately 1,260 shareholders, including the King himself and several members of Parliament. The amount of the first installment was one thousand two hundred pounds sterling, and these funds became the first loan to the government of the country. So there was the Bank of England - an organization without which it is difficult to imagine what would be the financial system of Britain itself and many other countries.

History of formation

At first this organization had the right to grant loans on bail, to carry out operations with commercial bills, to issue bills of exchange, to buy and sell silver and gold. The king did not have absolute power over her - he had to get permission from the parliament to get a loan. I must say that up to the year 1979 there were no normative documents regulating the work of this institution. And only this year, finally, was adopted by the relevant law, according to which the Bank of England systematizes all credit institutions that accept deposits. From this moment, after verification, each of them receives a new status. They turn into either recognized banks in England, or in licensed companies for accepting deposits. In the same, in 1979, the power in the country is taken over by the conservatives headed by Margaret Thatcher, and monetary policy becomes the focus of attention . Control over the activities of banks is carried out by the government through the sale and purchase of bills of exchange. Then come the 90-ies, and the priority direction is considered to be operations on the open market. The Bank of England, executing the decree of the Treasury, concludes transactions to regulate the level of gold and foreign exchange reserves. In addition, he can and is obliged to conduct interventions to control the rate of national currency. In 1997, a Memorandum was signed between the Bank of England, the Office for Supervision and Financial Regulation and the Treasury, which describes the principles and conditions for their smooth work aimed at ensuring the financial stability of the state. In the same year, in May, the Central Bank receives from the government the right to independently decide on the size of interest rates.

Control

The head of this financial institution is the manager (the service life is 5 years), which is part of the directorate. In addition to this body, there are 16 more members appointed by the government for a three-year term. 4 directors are part of the staff of the Bank itself, and the remaining 12 are managers of the largest companies. The Directorate must meet at least once a month and resolve all issues that are somehow related to the functions of the Bank. Any practical issues are resolved at the level of the Treasury Committee, which consists of 5 directors, the manager and his deputy.