Who owns the Bank of England?

[arc123]

How does it all work - anybody know??

[Viney]

We do I want to know why there isnt a cash point in the BOE (I work about 300 yeards from it)

[arc123]

You see thats what I thought - But if we do then why do we charge ourselves interest for the privilege of providing ourselves with money?

[Drew Carey]

In the simplest term, it is wholly owned by the Government and is wholly accountable to parliament.

It was setup many moons ago as a way of lending money to the government. However in 1946 was nationlised (in the same way as RBS today). The bank is now the "central bank" of the uk and its sole purpose is to manage the flow of currency within the economy.....ie by generating new money, managing interest rates etc. Any reserves of money the "bank" has is actually held on behalf of HM Treasury.

To be honest "Bank" is slightly misleading......the Americans Federal Reserve is a better title in my view as they are not conventional banks as such but really a central point where "Britains" money can be held on surplus (albeit electronically these days rather than gold) and where new money can be created as required; ie quantitive easing.

[Drew Carey]

Originally Posted by arc123

You see thats what I thought - But if we do then why do we charge ourselves interest for the privilege of providing ourselves with money?

Can you explain what you mean by this? I presume you are referring to the BoE interest rate?

If so, then the reason for this is that the level they set is a notional one. It is actually more to do with the interest rates that they charge to the other registered banks. This then in turn dictates what interest rates the banks are likely to charge for services. Most banks actually have very little "cash" reserves, they tend to borrow from the banks. In turn "we" as borrowers then borrow from the bank. In turn the commercial bank uses the interest it earns to pay the central bank what it owes.

The old addage of "money doesn't grow on trees" is very true, in that usually, the amounts being lent are simply recycled through the system. It is only when the bank uses quantitive easing to actually create cash that it is literally being "grown on trees".

[the_lone_wolf]

Originally Posted by Drew Carey

a central point where "Britains" money can be held on surplus

Britain? Money?

You mean a centre where our national debt can be calculated and conveniently forgotten

[Drew Carey]

Originally Posted by the_lone_wolf

Britain? Money?

You mean a centre where our national debt can be calculated and conveniently forgotten

You fickle man!!!!

But yes, our entire banking system is simply a revolving circle of debt, with the only income actually coming in if foriegn investors wish to invest in the UK and therefore buy up Govt bonds. However considering that nearly all the major international banks (who are the largest investors) now tend to have sizeable UK interests it is again the same money flowing around.

my god i actually learned something sencible on the org meh what next

Don't listen to a word of what Drew has said! He told me I was only 22 yesterday! (I wish)

[punyXpress]

Originally Posted by arc123

How does it all work - anybody know??

Smoke & Mirrors - it's the biggest con trick ever.
QUOTE: I promise to pay...