The Bank of England was established in 1694 to act as banker to the Government, but our responsibilities have changed a lot since then.
Watch the video below for a 60-second summary of the main things that we do.
One of our most well-known responsibilities is to design and print banknotes and make sure they get to the places they’re needed.
Only the Bank of England can issue banknotes in England and Wales, but seven commercial banks can issue them in Scotland and Northern Ireland.
We have to make sure that people have confidence in our currency – in other words, that they can feel sure that the banknotes they use are genuine. So we make sure our banknotes include the latest anti-forgery features, and we provide training and education resources to help people spot fake notes.
In September 2016 we issued a new £5 note, which was our first banknote made from polymer. Polymer is a thin, flexible plastic material. Polymer notes are much harder to forge, and they’re also longer lasting and cleaner than paper notes. We’ve since issued a polymer £10 note too, and we’ll be introducing polymer £20 notes in 2020.
The Bank of England is responsible for keeping the UK’s economy on the right track. One of the ways we do this is through monetary policy.
Decisions on monetary policy are made by our Monetary Policy Committee (MPC) eight times a year.
The Bank of England is responsible for making sure the financial system is safe and sound. We also provide critical services to the real economy in good times and bad.
Our Financial Policy Committee (FPC) identifies and monitors risks in the financial system, and takes action to reduce or remove them where necessary.
We can offer possible liquidity support to financial institutions which are struggling to secure access to sufficient cashflow, potentially putting them in danger of collapse. We don’t, however, offer financial support to firms that are in danger of insolvency. Instead, we manage failed financial institutions through our resolution process.
Payment and settlement
Payments play a key role in the smooth functioning of the economy. The Bank of England acts as a settlement agent for banks and others who are members of several payment systems.
On an average day we settle around £500 billion worth of payments between banks, almost a third of the UK’s annual gross domestic product (GDP). These transactions span, or back, almost every payment in the UK economy – from salaries to company invoices, from car purchases to coffee sales, from pensions to investment flows.
We also settle the net interbank transfers for several retail and card systems. In other words, we provide a safe, risk-free means for banks to transfer money to each other. This reduces the risk for everyone involved in these kinds of transactions, and promotes financial stability.
We provide wholesale banking services to the UK Government, over 100 overseas central banks and, where there are financial stability reasons to do so, certain other financial sector firms.
Our research underpins everything we do, from drawing up policies to designing banknotes.
Bank of England researchers take part in academic conferences and publish in peer-reviewed journals. Our staff can voice their own views on topical research issues in the Bank Underground blog and in working papers, which we publish to encourage comments and debate. We also organise our own research seminars and conferences.
Our research agenda sets out the main themes of our research priorities. We welcome contribution to our research from academics, policymakers and experts outside the Bank of England and across all disciplines.
Statistics and data
We gather and analyse data from banks and building societies, credit unions, insurers and mortgage companies. We publish much of this data in our regular statistical releases.
The data we gather is used within the Bank to inform policy decisions, and also by UK government departments and international organisations.
The Bank of England regulates and supervises some types of financial firms.
We supervise financial market infrastructures, which provide functions that are critically important to the UK financial system, such as payment systems and clearing houses.
Our Prudential Regulation Authority (PRA) regulates and supervises financial services firms.
What does the Prudential Regulation Authority do?
The PRA regulates and supervises around 1,500 banks, building societies, credit unions, insurers and major investment firms.
The PRA has three objectives:
- We promote the safety and soundness of the firms we regulate.
- We contribute to securing an appropriate degree of protection for insurance policyholders.
- We have a secondary objective to facilitate effective competition between firms.
We are particularly concerned about the harm that firms can cause to financial stability. A stable financial system is one in which firms continue to provide critical services to households and businesses.
We use two key tools to advance our objectives: regulation and supervision. Through regulation, we set standards or policies that set out what we expect of firms. Through supervision, we assess whether firms are meeting our expectations, the risks that firms pose to our objectives and, where necessary, we take action to reduce those risks.
Our approach to using regulation and supervision is:
Judgement based: we use our judgement to determine whether financial firms are safe and sound, whether insurers are providing appropriate protection for policyholders and whether firms continue to meet our minimum requirements (Threshold Conditions).
Forward looking: we assess firms not just against current risks, but also against those that could plausibly arise in the future. Where we judge it necessary to intervene, we generally aim to do so at an early stage.
Focused: we focus on the issues and firms that pose the greatest risk to the stability of the UK financial system and policyholders
We don’t aim for zero firm failure. Instead, we aim to ensure that a financial firm that fails does so in a way that avoids significant disruption to critical financial services.
What do the other financial regulators do?
There are several other organisations that protect the public in relation to financial services.
The Financial Conduct Authority (FCA) seeks to make sure that consumers get a fair deal. It is also responsible for promoting competition and making sure that financial markets work well.
If a consumer has a complaint that they haven’t been able to resolve against a bank, insurance company or financial firm, the Financial Ombudsman Service may be able to help. The ombudsman service is the official independent expert in settling complaints between consumers and businesses that provide financial services.
In the event that a financial firm gets into difficulty, the Financial Services Compensation Scheme (FSCS) offers compensation to depositors and holders of insurance policies. The FSCS covers business done by firms authorised by the Financial Conduct Authority and those authorised by the PRA.