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About the Bank

History (2)

Key moments in the Bank's history - a brief guide

King William & Queen Mary
When William and Mary came to the throne in 1688, public finances were weak. The system of money and credit was in disarray. A national bank was needed to mobilise the nation's resources.

William Paterson
William Paterson proposed a loan of £1,200,000 to the Government. In return the subscribers would be incorporated as the Governor and Company of the Bank of England.

The Royal Charter
The money was raised in a few weeks and the Royal Charter was sealed on 27th July 1694. The Bank started life as the Government's banker and debt-manager, with 17 clerks and 2 gatekeepers. In 1734 the Bank moved to Thread-needle Street, gradually acquiring land and premises to create the site seen today.

Commercial functions
The Bank managed the Government's accounts and made loans to finance spending at times of peace and war. A commercial bank too, it took deposits and issued notes.

The 18th Century
During the 18th Century the Government borrowed more and more money. These outstanding loans were called the National Debt.

1781: renewal of the Bank's Charter
Reliance on the Bank of England was such that when its charter was renewed in 1781 it was described as ' the public exchequer'.

The bankers' bank
By now the Bank was acting as the bankers' bank too. It was liable to fail if all its depositors decided to withdraw their money at the same time. But the Bank made sure it kept enough gold to pay its notes on demand.

The 'Restriction Period'
By 1797 war with France had drained the gold reserves. The Government prohibited the Bank from paying its notes in gold. This Restriction Period lasted until 1821.

The 19th Century
The 1844 Bank Charter Act tied the note issue to the Bank's gold reserves. The Bank was required to keep the accounts of the note issue separate from those of its banking operations and produce a weekly summary of both accounts.

Lender of last resort
The Bank Return, as it's called, is still published every week.

In the 19th Century the Bank took on the role of lender of last resort, providing stability during several financial crises.

The First World War: 1914-18
During the First World War the National Debt jumped to £7 billion. The Bank helped manage Government borrowing and resist inflationary pressures.

Gold
In 1931 the United Kingdom left the gold standard; its gold and foreign exchange reserves were transferred to the Treasury. But their management was still handled by the Bank and this remains the case today.

Nationalisation 1946
After the Second World War the bank was nationalised. It remained the Treasury's adviser, agent and debt manager.

Financial crises
During the 1970s, the Bank played a key role during several banking crises. The Bank was at the fore when monetary policy again became a central part of Government policy in the 1980s.

Operational independence May 1997
In May 1997 the Government gave the Bank responsibility for setting interest rates to meet the Government's stated inflation target.

Managing the modern bank
The 1998 Bank of England Act made changes to the Bank's governing body too. The Court of Directors, as it's known, is now made up of the Bank's Governor and 2 Deputy Governors, and 16 Non-Executive Directors.

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Key Resources

Governors of the Bank of England
A chronological list (1694 - Present)
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External Links
  • Financial Services Authority
    An independent body that regulates the financial services industry in the UK.
  • HM Treasury
    The United Kingdom's economics and finance ministry.
  • Royal Mint
    Responsible for the provision of the United Kingdom coinage.
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