The United Kingdom

Abstract

With the Bank of England having been founded in 1694 by the Ways and Means Act, the United Kingdom is home to the second oldest central bank in the world; next to the Swedish central bank. The bank has helped the country weather multiple financial crises and was asked to act as a lender of the last resort for the first time during the financial panic of 1866. During the First World War, it issued bonds called War Loans to raise money and delinked the pound and gold in 1914. The two were again delinked in 1931; however, the country recovered and the Bank of England is currently the second largest global custodian of gold, next only to the Federal Reserve Bank of New York. A non-public bank answerable to its shareholders for much of its existence, the Bank of England was nationalized in 1946 with the government buying all of the bank’s shares from around 17,000 shareholders. While only the Bank of England can issue bank notes in England and Wales, conduct monetary policy and oversee macroprudential regulations, three additional banks are authorized to issue bank notes in Scotland and four additional banks are authorized to issue banks notes in Northern Ireland. In addition, several of the Channel Islands, the Isle of Man and some British overseas dependencies issue their own currency, all of which trade at par with the pound sterling.