The Bank of England is the United Kingdom’s central bank. It conducts monetary policy, supports financial stability and provides core parts of the country’s money and payments infrastructure.
Its stated mission is to maintain monetary and financial stability for the public good. It is different from a high street bank: it does not provide ordinary household checking accounts or compete for personal loans.
Monetary policy and the inflation target
The government sets a 2% inflation target, measured by the Consumer Prices Index (CPI). The Bank’s Monetary Policy Committee (MPC) decides how to use its policy tools to pursue that target over the medium term.
Bank Rate influences wider borrowing and saving rates, spending and price pressures. The effects take time and are not identical for every borrower. The target is not a promise that every item’s price rises by exactly 2% each year.
Monetary policy is different from fiscal policy, the government’s decisions on taxes, spending and borrowing. The Bank’s inflation objective is not a fixed target for the pound’s exchange rate.
Liquidity support is different from resolving failure
As a central bank, the Bank can supply liquidity, funds or liquid assets needed to meet payments. Its published lending facilities have eligibility requirements and require appropriate collateral, assets pledged as security.
For example, a bank may have acceptable loan assets but need more immediately available funds to settle payments. Access to a facility depends on its terms and the institution’s condition. The Bank does not automatically provide whatever money any distressed institution requests.
Resolution is a separate process for managing institutional failure. It can use statutory powers to preserve critical functions and address losses. Borrowing liquidity does not itself mean the borrower is taken over, sold or closed, and it does not automatically repair insolvency.
Who issues UK banknotes?
The Bank produces and issues banknotes for England and Wales. Its 2026 banknote-issuance report identifies six authorized commercial issuers across Scotland and Northern Ireland, three in each, rather than seven. These issuers must hold backing assets under the applicable rules.
Coins are manufactured and issued by the Royal Mint. Illustrations of currency should therefore not imply that the Bank alone prints or issues every form of UK cash.
Supervision and financial stability
The Financial Policy Committee (FPC) addresses risks to the financial system as a whole. The Prudential Regulation Authority (PRA), part of the Bank, promotes the safety and soundness of the firms it regulates and protects insurance policyholders.
PRA-regulated firms include banks, building societies, credit unions, insurers and designated investment firms. The Bank also supervises important financial-market infrastructure, including relevant payment, clearing and settlement services. These roles have different objectives and powers.
How the Bank began
The Bank was founded on July 27, 1694 as a private bank, initially acting as banker to the government and helping finance war against France. William and Mary were among its original shareholders, not its only two shareholders. Sir John Houblon was its first governor.
It was nationalized in 1946. Its present responsibilities developed over time, rather than all being established in their modern form at its founding.
Last checked and updated on November 10, 2026 by the MBN editorial team.