The Bank of England Functions

The Bank of England fulfils a number of functions, some of which are fundamental to its role as a central bank, while others have evolved over time and other functions have been assigned to the Bank as the result of its special position in the financial system.

The Bank's main functions nowadays are:

• Banker to the Government: all government revenue is, in principle, paid into an account at the Bank and out of this account the government's expenditure is met. This is known as the Exchequer Account. It receives both the proceeds of taxation and of government borrowing. The money in the Exchequer Account is known as the Consolidation Fund: it is out of this fund that the government's expenses are paid.

• Banker to banking system: the Bank maintains current account for various banking institutions. These are operational accounts and they are particular important in the case of the clearing banks, since it is through these balances that clearing differences are settled and cash is withdrawn from the Bank.

• Banker to the customers: the Bank also acts as banker to some overseas central banks, to international organizations and to a small number of domestic institutions and private individual including staff.

• Note issuing authority: apart from a small issue by Scottish and Northern Ireland commercial banks, the Bank of England is the sole note-Issuer in the United Kingdom.

• Manager of the National Debt: as banker to the government, the Bank takes responsibility for government borrowing. It handles the issue of government stocks and, in particular, it deals with the weekly tender of Treasury Bills. It acts as registar for government stocks, handling interest payments and redemptions on maturity and also operates the Central Office Gilts Office, which facilitates the settlement of dealings in the gilt-edged market carried out by the main participants.

• Manager of the Exchange Equalisation Account: though this is a Treasury account it is operated by the Bank which intervenes in the foreign exchange market in order to influence the value of sterling against other currencies.

• Supervisor of the banking system: although for many years the Bank Exercised an informal system of supervision over the banking system, the 1974 secondary banking crisis revealed the lack of an adequate supervisory framework for banking in the United Kingdom, an inadequacy which was made good by The Banking Act 1979. This act laid statutory obligation upon the Bank of England to supervise the banking system. The Bank 's duties and powers in this matter now derive from The Banking Act 1987 (P. Bond. The Monetary and Financial System. — Ln.: Nothwich Pub., 1990).

Vocabulary list:

common features — общие черты;

consistent — последовательный;

Court of Directors — Совет Директоров;

Treasury — казначейство;

Treasury Bill — казначейский вексель;

The Exchange Account — Казначейский счет;

National Debt — Государственный долг;

Bank Act — Закон о Банке;

redemption — выплата;

maturity — погашение (истечение срока) ценной бумаги;

gilt-edged securities = gilts — золотообрезные ценные бумаги;