The Bank of England, being the main bank of England, serves as a model for the rest of the banks within the country. It was introduced for the first time in 1694 as the English Government banker. In 1734, the bank was shifted to the famous street of London city known as the ThreadneedleThread needle Street.
On 1st March, 1946, this bank was nationalized, which got liberated in 1997. As it is the main bank of England, it forms the basis for the financial systems of the UK. Although the bank serves several purposes of the country, but the main responsibility of this bank is to maintain the economic stability in the country. As the economic conditions of a country are dependent on the ups and downs of the currency value so it is very important to formulate a proper and effective economic policy. Thus, a proper check should be ensured on the fluctuation of the currency.
Another major function of the bank is to act as a lender of last resort to other banks operating within the country. If any bank is facing a finance trouble and is about to default, the bank of England can prevent the bank from being bankrupt and thus, promote stable financial conditions in the country.
The Bank of England holds gold as insurance in case of turmoil in the money markets of the world, and its reserves are worth around 4 billion. It has held gold reserves for over 300 years. In 1999, the bank undertook a major restructuring of its gold reserves and auctioned off a large portion of its holdings. This step was undertaken in order to improve the portfolio of the bank, and increase its holding in currency. Almost 400 tonnes of gold were sold off in this manner.
In the year 2007, the news spread that the bank is in a critical condition as far as the gold reserves are concerned. It was found that cracks were produced in the gold which could make it difficult to be sold. Thus, it was thought that the value of gold will decrease remarkably. It was present in forms of gold bars and coins.
Such a condition made it difficult for the gold to be traded in the market. Since the bank of England is the central bank, its actions affect the entire economy. The gold prices at that time were at a height since its demand was increasing day by day.
However, the selling of gold at low rates led to the sudden fall in it price due to which many investors had to lose their investments. As the gold was in its desired condition so bank had to sell it on considerably lower rates.
The Bank of England lost more than 3.8 billion pounds, due to which it was made to face considerable criticism. However, the good reputation and effective portfolio helped the bank in achieving stability in its condition quite soon. However, the economy of the world has already been disturbed for the coming several years.
On 1st March, 1946, this bank was nationalized, which got liberated in 1997. As it is the main bank of England, it forms the basis for the financial systems of the UK. Although the bank serves several purposes of the country, but the main responsibility of this bank is to maintain the economic stability in the country. As the economic conditions of a country are dependent on the ups and downs of the currency value so it is very important to formulate a proper and effective economic policy. Thus, a proper check should be ensured on the fluctuation of the currency.
Another major function of the bank is to act as a lender of last resort to other banks operating within the country. If any bank is facing a finance trouble and is about to default, the bank of England can prevent the bank from being bankrupt and thus, promote stable financial conditions in the country.
The Bank of England holds gold as insurance in case of turmoil in the money markets of the world, and its reserves are worth around 4 billion. It has held gold reserves for over 300 years. In 1999, the bank undertook a major restructuring of its gold reserves and auctioned off a large portion of its holdings. This step was undertaken in order to improve the portfolio of the bank, and increase its holding in currency. Almost 400 tonnes of gold were sold off in this manner.
In the year 2007, the news spread that the bank is in a critical condition as far as the gold reserves are concerned. It was found that cracks were produced in the gold which could make it difficult to be sold. Thus, it was thought that the value of gold will decrease remarkably. It was present in forms of gold bars and coins.
Such a condition made it difficult for the gold to be traded in the market. Since the bank of England is the central bank, its actions affect the entire economy. The gold prices at that time were at a height since its demand was increasing day by day.
However, the selling of gold at low rates led to the sudden fall in it price due to which many investors had to lose their investments. As the gold was in its desired condition so bank had to sell it on considerably lower rates.
The Bank of England lost more than 3.8 billion pounds, due to which it was made to face considerable criticism. However, the good reputation and effective portfolio helped the bank in achieving stability in its condition quite soon. However, the economy of the world has already been disturbed for the coming several years.
About the Author:
Jack Wagon is a gold investment expert. You can buy pure gold bars and get complete information about buying gold bars at his recommended website at http://www.goldmadesimple.com/.
