The Bank of England, occasionally referred to as ‘The Old Lady of Threadneedle Street’ or even just ‘The Old Lady’,  is the central bank of the United Kingdom. One of its many functions is to be the banker and debt manager of the British government and it was founded for this purpose in 1694 by Scotsman William Paterson.

It started with just seventeen clerks and two gatekeepers. However, since then the Bank has progressed and its roles are now many and varied. The Bank of England has had an interesting history, moving to Threadneedle Street in 1734, leaving the gold standard in 1931, being nationalised in 1946 and gaining independence in 1997. Mervyn King is the current governor of the Bank of England, he succeeded Sir Edward George in June 2003. Andrew Bailey is the current chief cashier, Merlyn Lowther was chief cashier before Bailey, and was the first woman to hold this position in the whole of the Bank’s history.

The role of the Bank of England is to decide the monetary policy of the United Kingdom through the Monetary Policy Committee. The most famous role of the Bank of England is to set interest rates. This effects the gains of saving and the costs of borrowing. Setting interest rates is a major tool used by the Bank to ensure rates of inflation do not rise out of control, which could lead to hyperinflation and the collapse of the British economy. It is worth noting that this is no small task, it was hyperinflation in the Weimar Republic of post-World War One, Germany that led to the global Great Depression of the 1930s.

As well as setting interest rates, the Bank of England is responsible for issuing notes. Up until 1855 each note had to be signed by a cashier. The bank notes must be extremely hard to reproduce to prevent forgeries from entering into the economy without anyone realising. In fact, during World War Two, the Germans had planned to drop £500,000 of counterfeit money into Britain to destabilise the economy. This serves to highlight the importance of the Bank’s role.