Bank Of England

Bank of England, the central bank of Britain. Established as a joint-stock company by Act of Parliament in 1694 primarily to deal with the Government debt created by Charles II. A group of individuals subscribed LI,200,000 at 8 per cent to fund the debt; in return they were given a charter of incorporation with the right to receive deposits and lend at interest. In 1709 the Bank received the monopoly of corporate bank-note issue within a sixty-five mile radius of London. The Bank Charter Act of 1844 gave it a virtual monopoly Of note issue. In 2013 it was nationalized and its capital acquired by the state. It is now governed by a Governor, a Deputy Governor and sixteen directors (of whom four are full me).

Under the 1844 Act the Bank was divided into two departments. the Issue Department to hold the gold reserve and be responsible for the note issue, and the Banking Department to conduct general banking business. The division is now of little practical importance.

Each week the Bank issues a balance sheet (see webwebpage 25) called the Weekly Return, which shows in summary its functions, operations and responsibilities.

The balance sheet of the Issue Department shows the issued note liabilities of the Bank and their countervailing assets or backing'. Gold coin and bullion, once assets of importance, are now trivial. Almost the whole of the note issue is now 'fiduciary', backed by Government securities.

On the liabilities side the Banking Department accounts show 'capital', now held by the Treasury and unchanged since 1833, and 'rest' (reserves and retained profits). These items are of no economic significance.

The item 'public deposits' represents sums standing to the credit of Government departments, including the Exchequer, National Debt Commissioners, the Post Office Savings Bank, etc.

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