Bank of England (BOE)

Bank of England is owned by the UK Government, and accountable to both Parliament and the general public.

The Bank of England is considered by many as one of the most capable central banks. The primary goal of the BOE is to promote the good of the people of the United Kingdom by maintaining monetary and financial stability.

The BOE aims to keep inflation at a 2% target per year. Any deviation from that, and they take measures to reach that target. The Bank of England’s Central Bank has a committee named the Monetary Policy committee with is responsible for setting monetary policy. The Monetary Policy Committee consists of 9 total members.

Overview

The Bank of England was nationalized in 1946, so we are now wholly owned by the UK Government. Before this, the Bank of England was a private bank owned by various shareholders. We gained independence from the Government to set monetary policy  in 1997. 

We have specific statutory responsibilities for setting policy – for interest rates, for financial stability, and for the regulation of banks and insurance companies. We have independence from the Government in terms of how we carry out these responsibilities. We do this within a framework set by Government but free from day-to-day political influence.

The Bank is overseen by a board of directors, known as the Court of Directors, who are appointed by the Queen on the recommendation of the Prime Minister and the Chancellor. The Court of Directors is responsible for setting and monitoring the Bank's strategy and making key decisions on spending and appointments. The Government chooses one of the non-executive, or external, members to chair the Court of Directors.

The policymaking committees: the Monetary Policy Committee, the Financial Policy Committee and the Prudential Regulation Committee make decisions about our responsibilities, for example on the interest rate.

The Internal Audit Division helps the Court of Directors and executive management to protect our assets, reputation and sustainability by independently and objectively evaluating the effectiveness of internal controls, risk management and governance processes.

Appearances before Parliament

Although it’s independent, they have to explain how and why they arrive at theire decisions. We demonstrate our accountability to Parliament through the House of Commons Treasury Committee. Our Governors, Executive Directors and external Monetary Policy Committee and Financial Policy Committee members regularly appear before the committee after the Inflation Report, Financial Stability Report and Prudential Regulation Authority Annual Report are published.

New members of the Monetary Policy Committee and Financial Policy Committee also have hearings at the Treasury Committee before they are appointed. Other committees also occasionally hold evidence sessions with representatives of the Bank. Transcripts, reports and video footage of all appearances are available from the UK Parliament website.

How the Prudential Regulation Authority (PRA) is funded

We are funded by the fees we charge firms. These fees depend on the size and type of firm, and the potential risk they could pose to financial stability.

The Financial Services and Markets Act 2000, as amended by the Financial Services Act 2012, contains the provisions that allow us to make rules to raise fees, in order to allow us to fulfil our statutory objectives. The Financial Conduct Authority (FCA) collects these fees on our behalf.

We prudentially regulate six categories of firms, or ‘fee blocks’:

o   deposit acceptors

o   general insurers

o   life insurers

o   managing agents at Lloyd’s

o   the Society of Lloyd’s

o   firms dealing as principal.

The amount payable by each fee block depends on the budgeted cost of prudentially regulating that category of firms. Within each category, the fee payable by an individual firm depends on the size of its business. Size is based on a specific measure for each category of firms (see table below). Firms that could cause the greatest harm to the stability of the UK financial system will be the main contributors to our funding needs.

Categories of firms and relevant fee bases

Category	Fee base
Deposit acceptors	Modified eligible liabilities
Insurers - general	Gross premium income/gross technical liabilities
Insurers – life	Adjusted gross premium income/mathematical reserves
Managing agents at Lloyd's	Active capacity
The Society of Lloyd's	Fee based on budgeted cost of regulating the society
Firms dealing as principal	Number of traders

Consulting on fees

The payment of fees is enforced through PRA rules, which are published in the PRA Rulebook. We will carry out an industry consultation before any proposed changes to the rules become final.

The Bank’s strategic plan

We launched our new strategic plan, ‘Vision 2020’, in May 2017. It has two main elements: how we work and how we communicate.

How we communicate

Communication at a central bank is an important policy tool. Our policies have maximum impact when they are heard and understood. So good communication links directly back to the successful delivery of our mission. 

On external communications, we will try to attract a wider audience with a targeted, creative approach to content and analysis, including key publications and speeches. The most successful communication is also two-way – as much about listening as speaking. This will be supported by a step-change in how we communicate internally. We will tailor our internal communications content for different audiences to support better policy formulation and decision-making. Our decision-making process will be as effective and empowering as possible.

How we work

We all do our best work when we work with the right people, with the right skills, on what matters most – supported by the right technology. By 2020, working across boundaries will be the norm – bringing together people with deep expertise to solve problems. And we will invest in our managers along the way so they can support and unlock the potential of all our people. ‘How we work’ means better understanding our priorities and skills so we can match our expertise to where it is needed. And it means having the right technology to smooth the path.

(source: https://www.bankofengland.co.uk)