Banking services

The Bank of England is a central bank, not a commercial bank. This means that we do not provide accounts or banking services for the general public. But we do provide banking services for some organisations and financial sector firms.

Who can open an account with the Bank of England?

Members of the public cannot open a bank account with the Bank of England.

The Bank of England’s customer banking activities enable the Bank to fulfil its responsibilities as the central bank of the United Kingdom. This involves providing wholesale banking services to the UK Government, overseas central banks, and, where there are financial stability reasons to do so, certain other financial sector firms.

Our approach is not to compete with commercial banks. As we are a central bank, banking with us differs in several ways from banking with a commercial bank:

  1. Our services are close to credit-risk free – in other words, the risk of us defaulting is close to zero.
  2. Our services are unlikely to be adversely affected by volatile market conditions.
  3. We are not motivated by profit.

So we offer banking services to key links in the economy – the Government, central banks and some financial sector firms – because this contributes to the stability of the global financial system.

What types of banking services does the Bank of England provide?

We provide the following services for our customers:

Banking for the UK Government

We were originally founded in 1694 to act as the Government’s banker and debt manager.

Today, the Government’s retail banking services are provided by commercial banks and managed by the Government Banking Service. We provide wholesale banking services to the Government.

We provide the Government with foreign currency accounts and payment services, and securities custody and settlement services. This includes acting as the Debt Management Office’s settlement agent for its securities activities. We also act as the Treasury’s agent in the day-to-day management of the Exchange Equalisation Account, which holds the UK’s reserves of gold, foreign currency assets and International Monetary Fund Special Drawing Rights.

Banking for other central banks

We provide banking services to over 130 overseas central banks.

This helps these central banks to operate safely in sterling markets, reducing the credit risk that they would otherwise face when holding assets at, or transacting directly with, commercial banks. In turn, this supports international financial stability.

While we provide these services for the benefit of central bank customers, they also make it easier for us to gather market intelligence.

Banking for financial sector firms

We provide banking services for certain financial sector firms, where there are clear financial stability reasons to do so.
 
One type of firm we provide banking services to is central counterparties (CCPs). We offer banking services to CCPs because they are an important link in the financial system. They act as an intermediary between buyers and sellers in a trade. CCPs effectively guarantee the terms of the trade so, if one of the parties defaults on the agreement, the CCP steps in.
 
Making central bank banking services available to CCPs is in line with international standards. These are set out in the report ‘Principles for financial market infrastructures’, by the Committee on Payment and Settlement Systems and the International Organization of Securities Commissions.

 

PDFThe Bank of England as a bank

This page was last updated 05 December 2017
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