The Bank of England (BOE) was privately founded in 1694 and was eventually nationalised in 1946. It became affectionately known as “The Old Lady of Threadneedle Street” for reasons connected with its London location, which the bank eventually outgrew.
As the UK’s central bank, the BOE is charged with maintaining financial stability. The bank is controlled by a board of directors, the members of which are appointed by the Queen (although their selection is suggested by the Chancellor of the Exchequer and the Prime Minister). However, the institution is owned by the UK Government and has not always been allowed to control the UK’s monetary policy. Legislation in 1997 restored this power to the BOE and in so doing returned the bank to the fold of the world’s independent central banks. The bank remains fully accountable for its decision-making to the UK Parliament through various mechanisms such as the Treasury Committee.
The BOE is the sole supplier of banknotes in England and Wales, circulating them (pounds sterling) in denominations of £5, 10, 20 and 50. This monopoly does not extend to Scotland and Northern Ireland, where some seven banks issue their own variations of the same denominations. Although the different appearance of these notes can lead to confusion, all legal UK banknotes can be easily identified by the word “sterling”. The BOE introduced in 2016 its first polymer banknote: it is expected that this plastic £5 note will be more durable and resistant to forgery than the more traditional version it replaces.
The BOE employs over a staff of around 3000, nevertheless its regulatory oversight of firms such as banks, building societies, insurance and investment companies, has been handed over to a recently created entity, the Financial Conduct Authority, which is now charged with overseeing that good practice is engendered throughout the country’s wider financial sector.