Learn with us
We have put together some of our resources to help students learn about macroeconomics and the role of the Bank of England. These resources link to the GCSE and A level economics syllabus.
Introduction to the Bank of England
The Bank of England is the central bank of the United Kingdom
- Monetary stability means stable prices and confidence in the pound.
- Financial stability means an economy that works effectively, allowing people to make payments, borrow money, and feel confident about financial institutions, such as banks and insurers.
Monetary policy
Monetary policy is an action that central banks and governments take to influence how much money is in the economy and how much it costs to borrow.
As the UK’s central bank, we use two main monetary policy tools.
- We set the interest rate that we charge banks to borrow money from us. This is called Bank Rate.
- We create money digitally to buy corporate and government bonds. This is known as asset purchase or quantitative easing (QE).
We set monetary policy to achieve the Government’s target of keeping inflation at 2%.
Monetary policy affects how much prices are rising – called the rate of inflation. Low and stable inflation is good for the economy and it is our main monetary policy aim.
Our ‘Keeping on an even keel’ video series explains how we support our economy and financial system. These short modules (about three minutes each) open in Youtube. Parts one, two and three of the series address monetary policy.
Financial stability
The economy is only healthy if people have confidence in financial institutions, such as banks, building societies and insurers. Our Financial Policy Committee (FPC) identifies, monitors and takes action to remove or reduce risks in the financial system. For example, if a bank goes out of business, we work hard to ensure its failure does not have a knock-on effect on other financial institutions. This helps to protect - and enhance - the resilience of the UK financial system.
We regulate and supervise financial firms through the Prudential Regulation Authority (PRA). The PRA is responsible for 1,500 banks, building societies, credit unions, insurers and investment firms. These companies must hold enough capital and have adequate risk controls. Close supervision of firms gives us an overview of their activities, meaning we can step in if they are not being run properly.
Parts four, five and six of our ‘Keeping on an even keel’ video series discuss financial stability. These short modules (about three minutes each) open in Youtube.
Coronavirus
Learn more about the effect of coronavirus on the UK economy.
Bank Overground
Where we share our internal analysis. Each bite-sized post summarises a piece of analysis that supported a policy or operational decision such as How are the rising cost of living and interest rates affecting households’ ability to pay their mortgage?, How does household financial resilience compare to the early 1990s recession? and To what extent did the recent increase in long-term UK interest rates reflect UK-specific factors?
Explainers
Bite-size guides to explain key economic concepts in a simple and jargon-free way.
This page was last updated 31 March 2023