Bank of England

The Bank of England is the central bank for the United Kingdom and is responsible for issuing printed currency (coins are issued by the Royal Mint), setting interest rates, managing inflation and as the lender of last resort for banks in the United Kingdom. It was founded in 1694 by the Bank of England Act 1694. The 'Old Lady', the administrative home of the Bank, is located on Threadneedle Street in the City, London's financial and business district. In 1947, the bank was nationalised. Following the election of Tony Blair's New Labour party in 1997, the bank was given responsibility for setting interest rates to meet the Government's stated inflation target. The current governor of the Bank is Mervyn King.

The last major legislative change to the operation of the Bank of England was the Banking Act 2009.

Monetary Policy Committee

Monetary policy is determined by the Monetary Policy Committee which meets every month for two days to determine interest rates in accordance with the current inflation target. The Committee is made up of the Governor, the two Deputy Governors and six other members. A representative from the Treasury is allowed to attend the Monetary Policy Committee meetings in an advisory capacity but may not vote. The Committee publishes minutes and records of votes, and is accountable to Parliament through the oversight of parliamentary committees including the Treasury Committee.

In March 2009, due to the widespread problems in the banking sector and the economy more generally following the collapse of Lehmann Brothers and other United States banks and of Northern Rock in the United Kingdom, - the Bank of England has also been allowed to inject money into the the economy by the process of quantitative easing. The process of quantitative easing is directed by the Monetary Policy Committee and is undertaken through the purchase of assets. As of December 17, 2009, the Bank has purchased £190,143,000,000 worth of assets, the vast majority of which were government bonds.