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.