• Join over 1.2 million students every month
  • Accelerate your learning by 29%
  • Unlimited access from just £6.99 per month

Discuss the role that the Bank of England plays within the UK economy

Extracts from this document...

Introduction

Discuss the role that the Bank of England plays within the UK economy. The Bank of England was founded in 1694 to act upon the government as its banker and debt-manager. Since it was founded, its role has developed and evolved into what we have today, with its role centred on the management of the nations monetary unit, the pound and it is the infrastructure of the UK's financial system. (http://www.bankofengland.co.uk/about/history/index.htm visited 27th October 2005 last updated 12th June 2002 by Anon) The history of the Bank is one of great interest in this country, but also of continuing relevance and importance to the bank today. Events that have taken place within the last three hundred years have helped to shape and influence the role and the general responsibilities of the Bank. The Bank has moulded the culture and traditions and the expertise of the Bank as a central unit to the early years of the 21st century. Much of the history of the bank runs in tandem to the financial and economic history of this country, and often too the political history of the UK more generally. ...read more.

Middle

At each monthly meeting the members vote on what they believe should happen to the interest rates. If the vote is equal, then the Governor of the Bank of England has the casting vote. There are many different internal consumer demand changes that will affect the general public. Firstly there is consumer borrowing. Many consumers use this method to borrow money in the form of credit cards or loans. As the interest rates increase, it will become less attractive to borrow at this time as repayments will be higher Next, there is consumer debt. Because of levels of borrowing at present, higher interest rates will mean higher repayment costs. This is known as debt servicing. This will leave the consumers as a whole with less surplus income to spend as this leads to a fall in demand. Mortgage debts are present because most people have to borrow to purchase a home and the payments on their property will vary based on the interest rate. Higher interest rates means higher repayments which ultimately leads to a fall in demand. ...read more.

Conclusion

(Atril, P and McLaney E Accounting and Finance for Non-Specialists fourth edition 2004 Chapter 12 p356-357) "We have been able to demonstrate that using the point and figure charts one box system, important turning point levels for UK interest rates are predictable sometimes decades in advance. The importance of interest rate setting should prioritise forecasts." (Ronald L. Giles Managerial Finance; Forward looking UK interest rates: a point and figure chart approach Volume: 31 Issue: 5; 2005 Research paper). What this is saying is that we can predict how interest rates will fall on rise based on the current state of the economy and the position it has within the world trade. If economy is doing well then we can say that interest rates will be affected in a way in which we can predict for the future. In this case they may rise but if the economy is doing poorly then they may fall in the future. To conclude with I would say that the Bank of England plays a major role in the stability of this country. Without it this country would have no financial stability to be a world player on the trade market like it is now. ?? ?? ?? ?? Sheraz Anwar 1 ...read more.

The above preview is unformatted text

This student written piece of work is one of many that can be found in our GCSE Economy & Economics section.

Found what you're looking for?

  • Start learning 29% faster today
  • 150,000+ documents available
  • Just £6.99 a month

Not the one? Search for your essay title...
  • Join over 1.2 million students every month
  • Accelerate your learning by 29%
  • Unlimited access from just £6.99 per month

See related essaysSee related essays

Related GCSE Economy & Economics essays

  1. Retailing In India - A Government Policy Perspective

    The generous financial incentives Ford received were only as important as proximity to a port. Land subsidies were even less significant. When incentives do attract foreign investment, unintended consequences often follow. Fiscal costs can escalate as incentives are extended to local companies.

  2. Case Study: The Home Depot

    So, they are superior to competitor capabilities. We may assume that Home Depot has enough extendibility possibilities to gain new products from the vendors and suppliers they have a business relationship with. With over 5,700 business relationships, there should be enough possibilities. Chapter 6: Competencies transferred to different markets What core competencies does Home Depot possess that can be transferred to the professional contractor market?

  1. Monetary policy of a globalised economy

    Current account balances that are very wide of the mark can, however cause serious problems. CHAPTER 3 MONETARY POLICY IN AN OPEN ECONOMY The Central Banking System The central bank as mentioned earlier has a very important role in any economy.

  2. How have interest rates changed over the last thirty years? What affects have these ...

    Essentially the way that interest rates affect the economy is through the forces of supply and demand on the economy. When the MPC sets the interest rates they are controlling the demand in the economy. Demand then affects the economy.

  1. Liberalization: where it has lead us and where it is headed

    I think so. There is only one thing that could stop it: the Indian government. But I don't believe it will. I believe so for a one reason: the secret is out. Hundreds of millions of ordinary Indians now watch television, both Indian and foreign, which they did not do

  2. The Famous Grouse - company profile and exports

    There is a very high exporting industry and financial sector. It offers companies to import into Germany with minimal restrictions. There is already a genuine interest in alcohol and brewing and famous grouse can offer a traditional scotch that should be well received by a very diverse German population.

  1. The un-utopian issue

    A free market will try and improve their output of the scarce products in quite a number of ways, being increasingly the choice of developed ones the use of technology. Among other choices, here are a few ways free markets solve scarcity...

  2. Is residential property in the UK a good investment?

    Even if the price of housing suddenly shot up it does not mean that the supply of housing would suddenly increase like the price. Of course there would be more supply of housing but as the figures above will show the supply can not match soaring prices.

  • Over 160,000 pieces
    of student written work
  • Annotated by
    experienced teachers
  • Ideas and feedback to
    improve your own work