Short Guide to Role of Bank of England

  1. oversee whole monetary system
  2. act as gov’t agent

BoE works very closely with the treasury

Functions

1. Sole issuer of notes. The amount of cash printed depends upon the demand by consumers

2. It acts as a bank to
a) The Govenrment
b) to recognised banks. Operational balances of banks

3. oversees banks

4.  It manages the gov’ts borrowing programme. Even when the gov;t has a surplus bonds will be reaching maturity

5. It oversees activities of banks and other financial institutions

6. Provides liquidity to banks

7. It operates gov’t monetary and exchange polic. In particular the Monetary Policy Committee MPC set interest rates (base rate) this rate determines mortgage and other interest rates throughout the economy. They look closely at future inflation and try to keep within the government's target of CPI 2% +/-1