Unit IV The Bank of England

Reading

The Bank of England is the central bank of the United Kingdom. Sometimes known as the “Old Lady” of Threadneedle Street, the Bank was founded in 1694, nationalized on 1 March 1946, and gained independence in 1997. Standing at the centre of the UK's financial system, the Bank is committed to promoting and maintaining monetary and financial stability as its contribution to a healthy economy.

The Bank's roles and functions have evolved and changed over its three-hundred year history. Since its foundation, it has been the Government's banker and, since the late 18th century, it has been banker to the banking system more generally - the bankers' bank. As well as providing banking services to its customers, the Bank of England manages the UK's foreign exchange and gold reserves.

The Bank has two core purposes - monetary stability and financial stability. The Bank is perhaps most visible to the general public through its banknotes and, more recently, its interest rate decisions. The Bank has had a monopoly on the issue of banknotes in England and Wales since the early 20th century. But it is only since 1997 that the Bank has had statutory responsibility for setting the UK's official interest rate.

Interest rates decisions are taken by the Bank's Monetary Policy Committee. The MPC has to judge what interest rate is necessary to meet a target for overall inflation in the economy. The inflation target is set each year by the Chancellor of the Exchequer. The Bank implements its interest rate decisions through its financial market operations - it sets the interest rate at which the Bank lends to banks and other financial institutions. The Bank has close links with financial markets and institutions.

The Bank offers technical assistance and advice to other central banks through its Centre for Central Banking Studies, and has a museum at its premises in Threadneedle Street in the City of London, open to members of the public free of charge.

Comprehension

1. Agree or disagree with the statements.

1. The Bank of England was founded in 1946.

2. The Bank maintains monetary and financial stability of the country.

3. The nickname of the bank is the Old Lady.

4. It is the banker’s bank.

5. The Bank of England doesn’t manage the UK's foreign exchange and gold reserves.

6. The bank has had a monopoly on the issue of banknotes in England and Wales since the early 18th century.

7. The bank doesn’t have links with financial markets and institutions.

8. The Bank of England was nationalized in 1997.

Vocabulary

2. Fill in the correct words from the list below:

bills, withdraw, checking, safety deposit box, earn, jewelry, certificate of deposit, loan, traveller's checks, to save, currency, savings

Yesterday, I went to a bank to open up a savings and … account. I deposit about $300 every month in my savings account … money for major purchases or for a rainy day when I have unexpected expenses. My paycheck is deposited directly into my checking account, and I write out checks to pay my … . My checking account is free if I maintain a minimum balance of $25 in the account. I also have about $100 automatically transferred from my checking to my … account on a monthly basis. The accounts … very little interest, but it's better than earning nothing. Therefore, I also have a … that earns a higher rate of interest, but I can't … the money from the account for one year. Actually, I need money because I'm planning on taking out a student … to pay for college tuition. Also, I rent a … at the bank and store my valuables there including important documents, some coins and … , and the deed, or ownership record, to my house. Finally, I can exchange my money into the … of other countries, or I can buy … before I depart on a trip.