The Bank of England is the UK's central bank. It sets interest rates, issues banknotes, and supervises banks and insurers through the PRA.
Last reviewed: 1 July 2026
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REGULATIONS |
The Bank of England is the UK's central bank. It is not a high street bank that ordinary customers can open an account with. Its role is to maintain the stability of the UK's currency and financial system.
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KEY FACTS
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Its four main functions
The Bank sets monetary policy, principally the Bank Rate, to keep inflation close to the government's 2% target. It issues the physical banknotes used across England and Wales. Through the Prudential Regulation Authority, it supervises the financial soundness of banks, building societies, credit unions, and insurers. Through the Financial Policy Committee, it identifies and responds to risks that could threaten the stability of the financial system as a whole.
Why it is not a government department
The Bank of England is a public body but operates independently of the UK government on its day-to-day monetary and regulatory decisions. This independence is intended to keep decisions such as interest rate changes free from short-term political pressure.
The Bank of England's four main functions
| Function | Body Responsible | What It Covers |
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| Monetary policy | Monetary Policy Committee (MPC) | Bank Rate, inflation target |
| Financial stability | Financial Policy Committee (FPC) | System-wide risk |
| Firm supervision | Prudential Regulation Authority (PRA) | About 1,500 banks, building societies, credit unions, insurers, and major investment firms |
| Currency issuance | Bank of England directly | Banknotes in England and Wales |
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Worked Example: How a Bank Rate decision travels through the system The MPC meets and decides to change the Bank Rate. That decision does not fix mortgage or savings rates directly. Individual lenders set their own rates in response, usually adjusting new fixed-rate deals within days to weeks, while variable-rate products often move faster. The size and speed of the pass-through varies by lender and product type. |
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This article is general information, not financial or legal advice. Rules and limits can change: always check the current position with the regulator or scheme concerned before relying on any figure here. |
Can I open a bank account with the Bank of England?
No, the Bank of England does not offer accounts to the public. It provides banking services to the government and to commercial banks, not to individual customers.
Does the Bank of England set the interest rate on my mortgage directly?
No, it sets the Bank Rate, which influences but does not directly set the rates individual lenders charge on mortgages and savings products.
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Related Guides |
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