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The Gold Reserves Of The Bank Of England
The Bank of England, being the main bank of England, serves as a model for the rest of the banks within the country. It was introduced for the first time in 1694 as the English Government banker. In 1734, the bank was shifted to the famous street of London city known as the ThreadneedleThread needle Street.
On 1st March, 1946, this bank was nationalized, which got liberated in 1997. As it is the main bank of England, it forms the basis for the financial systems of the UK. Although the bank serves several purposes of the country, but the main responsibility of this bank is to maintain the economic stability in the country. As the economic conditions of a country are dependent on the ups and downs of the currency value so it is very important to formulate a proper and effective economic policy. Thus, a proper check should be ensured on the fluctuation of the currency.
Another major function of the bank is to act as a lender of last resort to other banks operating within the country. If any bank is facing a finance trouble and is about to default, the bank of England can prevent the bank from being bankrupt and thus, promote stable financial conditions in the country.
The Bank of England comprises gold reserves as insurance, and its value is nearly 4 billion. These gold reserves are held with this bank for over 300 years. In 1999, major part of these gold reserves was sold off in order to improve the bank reputation in the country. This has also helped in increasing the currency storage of the bank. Moreover, nearly 400 tonnes of gold were auctioned in this regard.
In the year 2007, the news spread that the bank is in a critical condition as far as the gold reserves are concerned. It was found that cracks were produced in the gold which could make it difficult to be sold. Thus, it was thought that the value of gold will decrease remarkably. It was present in forms of gold bars and coins.
Such a condition made it difficult for the gold to be traded in the market. Since the bank of England is the central bank, its actions affect the entire economy. The gold prices at that time were at a height since its demand was increasing day by day.
Nevertheless, this action lead to a drop in the price, and caused many investors to lose money. Since the gold was not in mint condition, the bank had to dispose it off at a lower price.
The Bank of England lost more than 3.8 billion pounds, due to which it was made to face considerable criticism. However, the good reputation and effective portfolio helped the bank in achieving stability in its condition quite soon. However, the economy of the world has already been disturbed for the coming several years.
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