The Bank of England features several roles and responsibilities across the organization. It has been around since the end of the 17th century, with minimum changes being applied to the banking systems (Arnold, 2019; Chappell Jr et al., 2022). The Bank of England represents a centralized structure that has the right to regulate other banks across the country. It is also the key player in the process of maintaining economic stability and deploying all the required policies intended to help the organization control banknote issue.
In England, a pound is the smallest banknote that can be utilized to measure currency. Overall, the coin system in England is rather complex. There are pence, pennies, guineas, and shillings (Froemel et al., 2022). Pounds can be found in the form of coins as well.
Because England is a relatively old country, it can be safe to say that the evolution of money was rather resource-intensive. According to Chappell Jr et al. (2022), from the actual weight of gold and silver, England transitioned to coins and paper. Despite a rather long history, the terminology for different banknotes and coins has remained unchanged since the opening of the Bank of England.
The process of money creation across the English banking system is based on the idea of issuing loans to consumers. By creating an account with the bank, the customer now owes a certain amount of money that will have to be returned as soon as possible (Froemel et al., 2022). As soon as the loan is paid back, the consumer virtually destroys the money created by the bank. This is a basic process that helps the Bank of England maintain a healthy balance between creating and destroying money.
References
Arnold, R. A. (2019). Economics (13th ed.). Cengage Learning, Inc.
Chappell Jr, H. W., Greene, W., Harris, M. N., & Spencer, C. (2022). Uncertainty and the Bank of England’s MPC.Journal of Money, Credit and Banking, 54(4), 825-858.
Froemel, M., Joyce, M., & Kaminska, I. (2022). The local supply channel of QE: Evidence from the Bank of England’s gilt purchases [PDF document]. Bank of England.