‘15 days of Economics’
Day 6: What do the Bank of England actually do?
The Bank of England is very different to the typical bank that can be seen on a high street. The bank does not offer loans or accounts to the public. Their role is to issue bank notes around the United Kingdom. They also determine interest rates for the UK. This, in turn affects the cost of savings, loans and mortgages. This is known as bank rate. They also ensure that a consumer can pay for a good or service securely as they oversee transactions.
The Bank of England produce £5, £10, £20, £50 banknotes that has certain security features to ensure their legitimacy. They also ensure the stability of prices making sure that the value of a persons money stays constant. This is because they control inflation rates. They also regulate all banks, insurers and investment firms in the UK. Finally, they attempt to make jobs stable and employment rates high. They can do this by lending to businesses who will support the economy.
The bank has a huge store of gold securely locked away. This is partly due to the limitedness of the source but also its immense value. The value of gold stays constant due to the limited supply but also the high demand. The bank stores over 400,000 blocks of gold which equates to roughly £200 billion in value. That is enough gold to cover the whole of the UK in gold leaf. The place is so secure that no heist attempts have ever occured. The gold is sourced from around the globe.
