Bank of England is the oldest in the world. It was founded in 1694 as a joint venture by a group of private bankers and traders. Was created by the acute need to English country funds for its war with France. Bank of England has two departments – emission and banking. The role of the Department of emission is confined mainly to the issue of banknotes and their security. Banknotes put it is transmitted to the banking department.
Bank of England performs all the usual central bank functions as:
Made monetary emission influence of money market instruments through its monetary and credit policy, plays the role of credit of last resort to all other banks, exercise control over the country’s gold reserves. Basic unit in the banking system of England are commercial banks. These include:
- Deposit banks – called clearing banks. They participate in, etc. London Chamber of clearing and payment made within a particular clearing agreement. Clearing banks balance their mutual cross-claims and obligations and factual relations governing the payment only in balance. Their main activities are taking deposits and lending, which are mainly short-term nature. They carry and credit much of British exports.
- acceptance facilities houses occurred in 18 century, when London became the largest financial and industrial center. Acceptance facilities houses were originally commercial companies, which know well the solvency of their counterparties and acquirers their trade policies, i.e they gave their consent to be paid on them of the day of maturity. Due to the wide international popularity and the reputation of British companies policies, accepted of them were benefited particularly with high confidence.
- acceptance facilities houses have other activities to carried out:
They perform consulting services operating in the foreign exchange and gold markets, are involved in buying and disposing of securities of various corporations, safekeeping and administration of securities to their clients.
- The discount houses are typical for the banking system of England. Their main activity is the discounting of bills. They are kind of intermediary between the Bank of England and other commercial banks. In need of resources banks may not turn for credit to the Central Bank, and to the discount houses, of which a deduction against their policyholders receive the necessary amount.
The financial houses provide consumer credit, leasing out and other operations.
- To commercial banks can refer and numerous foreign banks opened their branches in London. Within the group of special credit institutions include: investment trusts, savings banks, insurance companies and pensionnte funds.
Money – they are a specific product, which is measured by the value of all other goods and services, and is carried settlement of obligations used as a universal equivalent, and also by their value is retained for future periods. Electronic money – they are for preservation of prepaid monetary value on a technical device that allows its widespread use for making purchases or financial transactions without the need relation to bank accounts.
medium of exchange – everybody is trying to get money and then use them to buy the necessary goods.
a store of value.
means of payment – all debts are expressed in money and be discharged through them. Money is used as an economic measure, the exchange agent, means of payment and store of value.
differentiated to 3 more functions – social function of money, money as a tool for deferred payment, money as a tool for macroeconomic analysis.
Active money – this money involved in the transactions with goods and services. They participate directly in shaping the national income. They are also called money to secure deals and transactions.
Passive money – they serve to facilitate financial transactions. They pass from hand to hand and do not lead directly to accumulation of national income. They are cash transactions,which are not participating in deals and transactions.
Commodity money serve as a unit and are defined as goods, which is expressed by the price of other commodities. They allow to compare different quantities of single products or order to evaluate the global quantities of goods. Through the unit is made cost savings for information and savings plans and decisions.
Commodity money – first for money were used goods which are rare, expensive and unique, then for the money were used goods which are widespread.
Quasi money – they are a set of assets in the form of actively saving – term deposits in banks, deposits in savings banks, treasury bills and other.
Money multiplier – by determining factors of the money supply depending on the monetary base, at the base of which stand cash and deposits are make it possible to determine the money multiplier and measuring its value. It gives information about the quantity of money in circulation.
Speculative search for money – it occurs when the are expected changes in interest level. The expectation of rising interest rate% and drop of the rate of securities leads to speculative search of money passive, and the expectation of lower interest% and increase the rate securities causes a fall in speculative demand for cash.
Money supply – it is associated with detection needs of asking for money and the impacts to their entry money into the economy.
Interest – it is defined as the amount of money which the debtor pays of its lender for use in loan funds. It is seen as a reward for parting with liquidity. It is inextricably linked to the loan.