What does the Bank of England do?
The Bank of England is the UK’s central bank. Our mission is to promote the good of the people by maintaining monetary and financial stability.
The Bank of England was established in 1694 to act as banker to the Government, but our responsibilities have changed a lot since then.
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. We operate monetary policy by moving the interest rate (formally known as Bank Rate) up and down and, in certain circumstances, we also supplement this with measures such as quantitative easing. 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 Office for National Statistics (ONS) is a major customer for our data. We also provide data to the European Central Bank (ECB) and the Bank for International Settlements (BIS).
Regulating and supervising financial firms
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.