LA banque d'angleterre

THE BANK OF ENGLAND

The second oldest Central Bank in the world (after the Swedish Riksbank), created in 1694 in order to raise money for a new navy, after the French destroyed the old one. It’s amazing that the Bank was a private company until as recently as 1946. The Bank’s monetary policy Committee (MPC) has responsibility for the Monetary policy of the UK, setting the interest rates which in turn determine the interest rates for the rest of the economy; the committee is charged with meeting a target of 2 per cent consumer price inflation. The Bank had responsibility for supervising financial stability taken away from it in 1997, and then, (because that didn’t work) given it back in 2013, through its new body the Financial Stability Committee. The Bank of England is the UK’s lender of last resort, ie. The body which lends money to banks and financial institutions when no one else will.

There’s a lot of protocol and ceremony and ritual at the Bank […] At the same time, its most important proceedings, the meetings of the Monetary Policy Committee, are surprisingly open: the results of the monthly vote on the interest rate are published, including who voted for what, and so are the committee’s minutes.

THE FEDERAL RESERVE

The FED is the central bank of the USA. It does what other central banks do: runs monetary policy, supervises the operation of the financial system and acts as the lender of last resort. It’s called in full the Federal Reserve System because it operates through twelve regional branches, each of which supervises the banks in its own area. As the Fed’s own website explains:

Many of the services provided by this network to depository institutions and the government are similar to services provided by banks and thrift institutions to business customers and individuals. Reserve banks hold the cash reserves of depository institutions and make loans to them. They move currency and coin into and out of circulation, and collect and process millions of checks each day. They provide checking accounts for the Treasury, issue and redeem government securities, and act in other ways as fiscal agent for the US government. They supervise and examine member banks for safety and soundness. The Reserve Banks also participate in the activity that is the primary responsibility of the Federal Reserve System, the setting of monetary policy.

The whole idea of a central bank has been controversial in US history, with anti-federal critics correctly arguing that it would have immense and to some extent undemocratic power –which, it turns out, is exactly why a central bank proved necessary, since without it the financial system kept suffering from unmanageably severe crises. The FED is in general opaque and secretive about its own processes; while it was for years assumed to have an inflation target, it was only in January 2012 that the then Governor of the Fed, Ben Bernanke, made the target explicit at 2 per cent.

THE EUROPEAN CENTRAL BANK

The ECB’s chief task is to set interest rates, and its explicit target is to keep inflation close to but below 2 per cent. The Bank is located in Frankfurt and is seen by some as being too German in its focus, with the longstanding German emphasis on inflation not being or helpful at a time when what the

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