Bank of England

• 1. Introduction

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  The Bank of England guards enough gold to matter on a global scale. Around 5,134 tonnes of it, worth £141 billion, sit sealed in vaults beneath Threadneedle Street. That hoard could equal as much as 3 percent of all the gold ever mined in human history, an estimated 171,300 tonnes. Yet gold is only one part of what this institution does. It stands as the model most modern central banks have followed, and it still acts as banker and debt manager for the UK government. It also safeguards gold reserves belonging to roughly 30 other countries.

  So how did a bank founded to help pay for a war against France take on such reach? How did it come to guard a nation's prices, its payments, and its financial safety net? And why is it still known, in certain circles, by an old nickname born from a satirical drawing? The chapters ahead trace the answers through war, riot, crisis, and reform.

• 2. A Bank Born From War

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  In 1690, the Royal Navy suffered defeat at the Battle of Beachy Head. The French Navy's victory unsettled the government of William III of England. He wanted a fleet strong enough to challenge France on equal terms. The English government could not simply build one. It lacked both available public funds and the credit to borrow the £1.5 million it needed for that expansion.

  Scottish trader William Paterson had an answer. In 1691 he proposed a national bank as a way to bolster public finances. He later laid out the idea in his 1694 pamphlet, A Brief Account of the Intended Bank of England. He wrote that 'a publick transferrable Fund of Interest should be established by Parliament'. This fund, he added, would be 'convenient for the Receipts and Payments in and about the Cities of London and Westminster'. Two other men pushed the plan through Parliament and the City. Charles Montagu, the MP for Maldon, steered the proposal through Parliament and was later made Chancellor of the Exchequer. Michael Godfrey persuaded City financiers of its merits and became the bank's first Deputy Governor. Some historians, including W. R. Scott, credit William Phips with a more incidental role. His recovery of treasure from a sunken Spanish galleon, the Nuestra Señora de la Concepción, flooded the market with bullion. That, they argue, stirred fresh enthusiasm for joint-stock ventures just as the bank needed subscribers.

  Parliament passed the Tonnage Act 1694, funding the scheme through shipping duties, to raise £1.5 million for 'carrying on the Warr against France'. The loan carried 8 percent annual interest plus a £4,000 yearly management fee. The Crown granted the royal charter on the 27th of July 1694. Subscribers raised the full £1.2 million in just 12 days; 1,268 people signed on, more than two-thirds of them for under £1,000 each. King William and Queen Mary invested £10,000 apiece, the maximum allowed, and so did Sir John Houblon. The money went straight into rebuilding the navy. That investment was so large it helped transform the wider English economy. After England and Scotland formally united in 1707, the resulting Royal Navy helped make Britain the dominant naval power of the era.

• 3. First Officers, First Home

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  John Houblon became the bank's first Governor, with Michael Godfrey serving as his Deputy. Governance sat with the Governor, his Deputy, and a Court of 24 Directors, most of them merchant bankers from the City. Stockholders, known collectively as the Proprietors, elected the Directors each year through a General Court. On the 30th of July 1694, the Court of Directors adopted a common seal depicting 'Britannia sitting and looking on a Bank of mony'. Britannia has served as the bank's emblem ever since.

  Three senior officers served under the Governor and his Deputy: the Secretary and Solicitor, the First Accomptant, and the First Cashier. Their successors, later called the Secretary, Chief Accountant, and Chief Cashier, ran the bank's main divisions for the next 250 years. The Chief Cashier oversaw the 'cash side' of the business, the Chief Accountant the 'stock side', and the Secretary its internal administration. In 1694 the whole operation employed just seventeen clerks and two doorkeepers.

  The bank opened on the 1st of August 1694 in Mercers' Hall on Cheapside, having nowhere of its own to operate from beforehand. That space proved too small. From the 31st of December 1694 the bank operated out of Grocers' Hall on Poultry instead, staying there for almost 40 years. Houblon himself had served as Master of the Grocers' Company a few years earlier, from 1690 to 1691.

  In 1734 the bank finally moved to its own purpose-built home, on the site of Sir John Houblon's former house and garden on Threadneedle Street. Architect George Sampson designed the new premises, a narrow plot around 80 feet wide running north from the street. Inside stood a large Hall where notes were issued and exchanged. Beneath the whole complex ran vaults described at the time as having 'very strong Walls and Iron Gates, for the Preservation of the Cash'. A carved figure of Britannia, sculpted by Robert Taylor, decorated the pediment above the Hall's entrance, matching the emblem the bank had used since 1694. That building would keep expanding for the rest of the century, as the bank bought up the plots around it.

• 4. Sieges And Panics

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  Merchant Alexander Fordyce's bankruptcy threw the whole City of London into uproar in 1772. Historians often call it the first modern banking crisis the bank faced. In August 1773, the bank lent the East India Company money to keep it afloat, straining its own reserves for the rest of the year.

  Rioters climbed onto the church of St Christopher le Stocks in June 1780 to hurl projectiles at the bank during the Gordon Riots. The Lord Mayor of London asked the Secretary of State for a military guard to protect the bank and the nearby Mansion House. Soldiers of the Household Brigade then mounted a nightly watch, the 'Bank Picquet', a practice that lasted until 1973. The threatened church was demolished in 1782, opening space for the bank to expand west along Threadneedle Street; architect Robert Taylor built the new west wing there by 1786.

  A Corps of Bank Volunteers, between 450 and 500 men, formed in 1798 during the French Revolutionary Wars to defend the building against invasion. Its soldiers trained to move gold, silver, and the banknote printing presses to safety if the French landed. The Corps disbanded in 1802, reformed the next year at the start of the Napoleonic Wars, and was finally stood down in 1814.

  By 1797, years of war had drained the bank's gold reserves badly. On the 26th of February that year, the government suspended its ability to pay out in gold at all. Days earlier, an invasion scare following the Battle of Fishguard had rattled the country. The Bank Restriction Act 1797 kept that suspension in place until 1821. That same year, 1797, satirist James Gillray drew a cartoon that gave the bank a nickname it still carries: the Old Lady of Threadneedle Street.

  Nathan Mayer Rothschild supplied the bank with gold during the 'panic of 1825', averting a liquidity crisis that had already begun toppling country banks. Numerous commercial bankruptcies followed anyway among smaller provincial lenders. Parliament answered in 1826 with the Country Bankers Act, letting the bank open branches outside London for the first time. Eight had opened by the end of the following year. The Bank Charter Act 1844 went further, tying new note issues to gold reserves and giving the bank sole rights to issue banknotes in England. That 1844 Act would go on to shape which banks could print money in England for more than a century.

• 5. Bombs, War And Nationalisation

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  A bomb was found smoking beside the railings outside the bank on the 4th of April 1913. It had been planted the day after suffragette leader Emmeline Pankhurst was sentenced to three years in prison. The device, built into a milk churn, belonged to the Women's Social and Political Union's bombing and arson campaign for women's suffrage. It was defused before it could explode, on what was then one of the busiest streets in the capital. Its remains are now on display at the City of London Police Museum.

  Britain stayed on the gold standard, fixing sterling's value to the price of gold, until 1931. That year the bank had to take Britain off the standard as the Great Depression spread across Europe.

  Architect Herbert Baker rebuilt the bank's Threadneedle Street headquarters between 1925 and 1939. The new steel-framed building rose seven storeys above ground, with three more vault storeys below. The project demolished most of Sir John Soane's earlier work. Architectural historian Nikolaus Pevsner later called it 'the greatest architectural crime, in the City of London, of the twentieth century'. Charles Wheeler contributed sculpture and bronze work to the new building, Joseph Armitage its plasterwork, and Boris Anrep its mosaics. The bank remains a Grade I listed building today.

  German intelligence ran Operation Bernhard during the Second World War, counterfeiting notes between £5 and £50. By 1943 it was producing 500,000 forged notes a month. The original plan was to parachute the money into Britain and destabilise the economy, but the notes proved more useful paying German agents across Europe. Meanwhile the bank moved its printing works to Overton in Hampshire, and its Accountant's Department to Hurstbourne Park. Staff who stayed in London worked out of the underground vaults instead.

  The Labour government nationalised the bank in 1946, ending private stockholder ownership that had lasted since its 1694 founding. The number of Directors dropped to sixteen, four of them full-time Executive Directors. In the years after the war, the bank pursued Keynesian policies, favouring easy money and low interest rates to support demand. It also tried to hold a fixed exchange rate while fighting inflation and a weakening pound.

  That growing Accountant's Department eventually moved into a brand new building near St Paul's Cathedral called Bank of England New Change. It opened in 1957 as London's biggest post-war rebuilding project to date. The bank sold it in 2000, and the site was demolished in 2007 to make way for One New Change.

• 6. Printing The Pound

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  Bank of England notes date back to 1694, first written out entirely by hand. Printing crept in gradually after 1725, though cashiers still had to sign each note and make it payable to a named person. Notes were not fully printed until 1855. Until 1928 every note issued was a plain black-and-white 'White Note'. In the 18th and 19th centuries these came in £1 and £2 denominations; the 20th century range ran between £5 and £1,000.

  Henry Portal of Whitchurch, Hampshire began supplying high-quality paper for the bank's notes under an 1724 contract. Private firms did the actual printing at first, watched over by a bank clerk who counted every copy made from the guarded copper plates. The bank brought printing onto its own premises in 1791, still under private contract, before taking the process fully in-house in 1808.

  Provincial banking companies lost the right to issue their own notes as they merged into larger banks under the Bank Charter Act 1844's restrictions. Fox, Fowler and Company issued the last private banknotes in England and Wales, in 1921. Three commercial banks in Scotland and three in Northern Ireland still print their own notes today, under the bank's regulation.

  The Currency and Bank Notes Act 1914 gave HM Treasury temporary power to issue banknotes. These new notes came in £1 and 10 shilling denominations, issued at the start of the First World War. These Treasury notes carried King George V's image and could not be exchanged for gold. Bank of England notes themselves did not feature a monarch's portrait until 1960. Treasury notes stayed in circulation until the Currency and Bank Notes Act 1928 returned note-issuing power to the bank. The bank then issued its own ten shilling and one pound notes for the first time, on the 22nd of November 1928.

  Thieves stole more than £53 million in banknotes from a bank depot in Tonbridge, Kent, in 2006. The bank had moved its printing operation into the former St Luke's Hospital in 1917, then out to Debden in 1958. Modern notes are printed under contract by De La Rue Currency in Loughton, Essex. In 2026 the bank plans to issue a new series of notes, replacing historical figures with British wildlife. The images are designed to resist counterfeiting while celebrating nature in Britain.

• 7. Independence And The New Mandate

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  Chancellor Gordon Brown announced on the 6th of May 1997, days after Labour's election win, that the bank would gain operational independence over monetary policy. The Bank of England Act 1998, in force from the 1st of June 1998, handed the Monetary Policy Committee sole responsibility for setting interest rates. Its initial target was 2.5% inflation on the Retail Prices Index; the target later became 2% once the Consumer Price Index replaced it. If inflation misses that target by more than 1%, the Governor must write an open letter to the Chancellor explaining why and proposing a fix.

  Regulation and supervision of banking and insurance moved to the Financial Services Authority in June 1998. A decade later, after the 2008 financial crisis, that responsibility returned to the bank. The bank's Prudential Regulation Authority was established in 2011 to supervise banks, building societies, credit unions, insurers, and investment firms. Alongside it, the Financial Policy Committee began identifying and monitoring risks across the financial system. It published findings twice a year in a Financial Stability Report. The Financial Services Act 2012 formalised both bodies and also created the independent Financial Conduct Authority.

  The bank has run an Asset Purchase Facility since January 2009, buying assets to keep credit markets liquid. Since March 2009 it has also used the facility to carry out quantitative easing. Six tranches of QE ran between 2009 and 2020, peaking that year at £895 billion. That total split between £875 billion of UK government bonds and £20 billion of commercial bonds. The bank began winding the portfolio down in February 2022. By September 2022 it had let £37.1 billion in government bonds and £1.1 billion in corporate bonds mature. Active sales of the rest began later that month.

  Canadian Mark Carney served as Governor from the 1st of July 2013, the first Governor who was not a UK citizen at the time of his appointment. Andrew Bailey succeeded him as Governor on the 16th of March 2020. David Roberts chaired the bank's 2024 Court of Directors, alongside four Deputy Governors covering monetary policy, financial stability, prudential regulation, and markets and banking. Ben Stimson had served as chief operating officer before Sarah John, previously the bank's Chief Cashier, took over the role in March 2025. Huw Pill has served as the bank's chief economist since 2021. Some twenty executive directors now work alongside the Governors to form what the bank calls its wider executive management team.