The Bank of England serves as the central bank for the United Kingdom, with its headquarters located in the heart of the City of London’s financial district. Often referred to as the “Old Lady of Threadneedle Street,” it is recognized as the eighth-oldest bank in the world, boasting a history of over 300 years. Established in 1694, the Bank was nationalized on March 1, 1946, and achieved independence in 1997.

As a pivotal institution in the UK’s financial system, the Bank of England's mission is to “promote the good of the people of the United Kingdom by maintaining monetary and financial stability.” A key responsibility of the BoE is to ensure that transactions can be conducted easily and securely across the UK. To this end, it produces banknotes and oversees various payment systems, including debit and credit cards. Additionally, the Bank works to stabilize the cost of living, ensuring that the British pound (GBP) retains its purchasing power, often by adjusting the main interest rate in the UK.

The BoE also plays a crucial role in regulating and supervising major banks, building societies, credit unions, insurers, and investment firms in the UK, ensuring their safety and soundness. By maintaining stability in the financial system, the Bank connects individuals looking to save, invest, or borrow money. Furthermore, it monitors potential risks within the financial system and takes necessary actions, such as lending to banks in need, to ensure they can continue supporting businesses and the economy. The Bank also safeguards depositors, UK taxpayers, and the broader economy from the repercussions of a failing bank.

The Monetary Policy Committee (MPC) is a key component of the Bank of England, convening for three and a half days, eight times a year, to determine the official interest rate in the United Kingdom. The official bank rate, also known as the “Bank of England base rate” (BOEBR), is the interest rate at which the Bank of England lends to banks for secured overnight borrowing. This rate serves as the British Government’s primary interest rate for implementing monetary policy, akin to the U.S. discount rate, which is the borrowing rate for U.S. banks from the Federal Reserve.

In addition to setting the official bank rate, the MPC is responsible for guiding other elements of the government’s monetary policy framework, including quantitative easing and forward guidance. The Committee consists of nine members, including the Governor of the Bank of England.