The Bank of England is one of the most influential institutions in the UK, yet many people are unclear about what it actually does. Unlike commercial banks where you might have a current account or savings, the Bank of England doesn’t serve the public directly. Instead, it plays a central role in managing the UK economy. It’s often called the UK’s central bank, and its responsibilities affect nearly every part of financial life—from mortgages and savings to jobs and inflation. Here we see the thoughts of pros like Kavan Choksi UAE.
At its core, the Bank of England’s main job is to maintain monetary and financial stability. This means keeping inflation under control, supporting economic growth, and ensuring the financial system is secure and reliable. To do this, it performs several key functions.
One of its most well-known roles is setting interest rates. The Bank’s Monetary Policy Committee (MPC) meets regularly to decide the official Bank Rate, which influences the cost of borrowing and the return on savings across the country. If inflation is rising too quickly, the Bank may raise interest rates to slow down spending. If the economy is weak, it might lower rates to encourage borrowing and investment. These decisions aim to keep inflation around the government’s target, which is currently 2 percent.
Another major responsibility is issuing currency. The Bank of England is the only organisation authorised to print banknotes in England and Wales. It designs, produces, and distributes the notes that most of us use daily. The goal is to maintain confidence in the currency, ensuring that money is secure, trusted, and difficult to counterfeit. All current Bank of England notes feature updated security features and, since 2016, are made from polymer for improved durability.
The Bank also works behind the scenes to keep the financial system stable. It oversees large banks and financial institutions to ensure they are operating safely and aren’t taking excessive risks. This is part of its role in promoting financial stability. The Bank monitors threats to the economy and acts as a lender of last resort during financial crises. For example, during the 2008 financial crisis and again during the COVID-19 pandemic, the Bank took emergency steps to support the economy and protect the financial system.
Another important task is managing the country’s foreign currency reserves and working with international financial institutions. It helps the government manage public debt and works closely with the Treasury when it comes to financial policy and stability.
The Bank also plays an educational and research role. It publishes regular reports and forecasts on inflation, the economy, and financial markets. These publications are meant to help the public, businesses, and investors understand current economic conditions and the reasoning behind monetary policy decisions.
In short, while most people don’t deal directly with the Bank of England, its actions have a significant impact on the economy and daily life. Whether you’re applying for a mortgage, saving for retirement, or filling up your shopping trolley, the decisions made at Threadneedle Street shape the financial conditions that surround you.