Abstract
The Bank of England, founded in 1694 to finance war against France, soon became Britain’s largest bank. It became responsible for maintaining the gold standard and acting as lender of last resort. To do so, it had to withdraw from commercial banking. After failing to stay on gold (1931) the Bank became subservient to the Chancellor in macro-monetary policy and was nationalized in 1946. Operational independence to set interest rates in pursuit of an inflation target was restored in the 1990s, while its previous functions, notably bank supervision, debt management, and foreign exchange intervention, fell away.
This chapter was originally published in The New Palgrave Dictionary of Economics, 2nd edition, 2008. Edited by Steven N. Durlauf and Lawrence E. Blume
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Goodhart, C.A.E. (2008). Bank of England. In: The New Palgrave Dictionary of Economics. Palgrave Macmillan, London. https://doi.org/10.1057/978-1-349-95121-5_2405-1
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DOI: https://doi.org/10.1057/978-1-349-95121-5_2405-1
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