The Bank's Core Purposes are determined by Court as part of its role in setting the Bank's objectives and strategy.
The Bank of England exists to ensure monetary stability and to protect and enhance the stability of the financial system.
Core Purpose 1 - Monetary Stability
Monetary stability means stable prices and confidence in the currency. Stable prices are defined by the Government's inflation target, which the Bank seeks to meet through the decisions delegated to the Monetary Policy Committee, explaining those decisions transparently and implementing them effectively in the money markets.
Core Purpose 2 - Financial Stability
Financial stability entails maintaining an efficient flow of funds within the economy and confidence in financial intermediaries. This is pursued through: the Bank’s financial operations, including as lender of last resort; the decisions of the Financial Policy Committee; the PRA’s prudential regulation of financial institutions; the Bank’s role as resolution authority; and Bank oversight and regulation of key payment, clearing and settlement infrastructure.
The Prudential Regulation Authority (PRA) is responsible for the supervision of banks, building societies and credit unions, insurers and major investment firms. In total the PRA regulates around 1,700 financial firms. The PRA has a general objective to promote the safety and soundness of these firms and – specifically for insurers – contributes to the securing of an appropriate degree of protection for policyholders.
In pursuit of both core purposes the Bank is open in communicating its views and analysis and works closely with others including:
- Other central banks and international organisations to improve the international monetary and financial system.
- HM Treasury and the Financial Conduct Authority
The Bank will also play its part in promoting an open and internationally competitive financial centre in the United Kingdom, using its expertise to help make the United Kingdom financial system more efficient, where such efforts would be in the public interest and provided that they do not conflict with its primary responsibilities or those of other agencies.