Who owns the Bank of England?

[Luckypants]

Originally Posted by Drew Carey

albeit electronically these days rather than gold

not entirely true. We still have gold reserves, but substantially reduced by Gordon Brown literally selling the family silver (ok gold) in early 90s. If he had held on to that the recent rocketing price of gold would have helped pay for all the economic stimuli, but he sold in a low market. Financial genius!

I cannot find online a value of our current gold reserves, but it will be several billion.

Who owns the Bank of England? I suggest Gordon Brown should set up an enquiry and report after the next election.... woohoo this lot have 9 months left absolute tops and then we can get rid of them

Originally Posted by Ed

Who owns the Bank of England? I suggest Gordon Brown should set up an enquiry and report after the next election.... woohoo this lot have 9 months left absolute tops and then we can get rid of them

indeed he is a muppet... but who would replace him?

they are all arses...I vote me in charge or grinch..

I vote for Simon Cowell...

[Drew Carey]

Originally Posted by Demonz

I vote for Simon Cowell...

There is actually some merit in that, he may be a pompous a$$e however he does now how to make money and be succesful, something I don't think any PM will have the capability to do!!!

And yes, as LP rightly says, we do still have gold reserves, just not the amount we did have. However, quick bit of Wiki and the total we still have as at March 2009 is apparently 310.3 tonnes, so as at todays mid price apparently that is worth..... £5,964,276,300.....however, the US has a whopping £156,334,003,500!!!!

[arc123]

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

PunyXpress - could you expand on what you mean by this?? I don't think i'm far off your way of thinking but could you explain a bit more what you menan??

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

Drew - you suggested that it was us (as in the Government - who in turn 'represent' us) that own the BoE. The BoE charge the government interest when they loan them money. i.e. the government need cash to wage war in Iraq, the money is borrowed from the BoE. This money is then paid back to the BoE, with the addition of interest. My question is - If we/the Government own the BoE - why do we allow them to charge us interest for the privilege of using our own paper currency? Would it not be simpler (and cheaper for that matter) to bypass the BoE and produce our own paper currency (ala Abraham Lincoln's Greenbacks)

[Luckypants]

Originally Posted by arc123

The BoE charge the government interest when they loan them money. i.e. the government need cash to wage war in Iraq, the money is borrowed from the BoE. This money is then paid back to the BoE, with the addition of interest.

The BoE does not lend the government money. It helps them raise money by the sale of bonds (sometimes referred to as gilts). These bonds are bought by institutions and individuals as they are an almost cast iron investment as a government will always honour the pay back and have a fixed (albeit low) interest. The interest is paid to the lenders who hold the bonds, not the Bank of England.

[arc123]

The BoE does not lend the government money.

Okay so maybe I used a simplified terminology regarding the BoE 'lending' the government money.

It helps them raise money by the sale of bonds (sometimes referred to as gilts). These bonds are bought by institutions and individuals as they are an almost cast iron investment as a government will always honour the pay back and have a fixed (albeit low) interest.

The BoE being one of the said institutions that buys the gilts. Also - the BoE have 'bought' government debt - Also represented in the purchase of gilts. In simplified terms they are lending the government money (along with other, large commercial banks)

[keith_d]

Someone queried the "I promise to pay.." quote.

In centuries past, money was based on reserves of precious metal. So, when paper money was issued it was tied back to the precious metal reserves by a promise to pay the bearer a certain amount of sterling silver.

This was later replaced by the gold standard, where money was issued based on gold reserves. However, as the economy grew the limited reserves couldn't match the needs for money. In addition, developments in (fractional) banking effectively made the precious metal tie irrelevant.

So these days we have what's called a 'fiat currency'. Where the pound in your pocket is worth whatever someone else will give you for it. The currency is no longer linked to a tangible asset and is free to rise and fall (generally the latter) in value over time.

Hope this helps,

Keith.

[arc123]

The currency is no longer linked to a tangible asset and is free to rise and fall (generally the latter) in value over time.

with fiat currency and a fractional reserve banking policy, I think you are right in the assumption that the value of our paper-money is only going in one direction.

So back to the original question - who owns the BoE? Banks lend (or give them money in exchange for gilts/bonds). The government then pay back this money over an agreed timescale + interest. Why don't the government bypass the BoE, print their own money (like Abraham Lincoln did) and not have to pay interest?? I have read many rvarying reports, that a large proportion of income tax in the UK goes towards servicing the interest payments of nataional debt. So we work every day to pay the governement, and this money goes towards paying interest that does not need to be there in the first place.