Core Purposes

In pursuing its goal of maintaining a stable and efficient monetary and financial framework as its contribution to a healthy economy, the Bank has two core purposes; achieving them depends on the work of the Bank as whole. This part of the website describes and explains each core purpose and some of the work that is undertaken to achieve them. This material adds to that provided on the ‘About the Bank’ main page. Other parts of the website provide more information about each of the Bank’s activities.

In pursuing its goal of maintaining a stable and efficient monetary and financial framework as its contribution to a healthy economy, the Bank has two core purposes; achieving them depends on the work of the Bank as whole. This part of the website describes and explains each core purpose and some of the work that is undertaken to achieve them. This material adds to that provided on the ‘About the Bank’ main page. Other parts of the website provide more information about each of the Bank’s activities.

The Bank’s Core Purposes are determined by Court as part of its role in setting the Bank’s Objectives and Strategy. The statement below was reaffirmed by Court in May 2007.

 

Core Purpose 1 – Monetary Stability

 

Monetary stability means stable prices and confidence in the currency. Stable prices are defined by the Government’s inflation target, which the Bank seeks to meet through the decisions on interest rates taken by the Monetary Policy Committee, explaining those decisions transparently and implementing them effectively in the money markets.

 

Core Purpose 2 – Financial Stability

 

Financial stability entails detecting and reducing threats to the financial system as a whole. Such threats are detected through the Bank’s surveillance and market intelligence functions. They are reduced by strengthening infrastructure, and by financial and other operations, at home and abroad, including, in exceptional circumstances, by acting as the lender of last resort.

In pursuit of both purposes the Bank is open in communicating its views and analysis and works closely with others, including:

  • Other central banks and international organisations to improve the international monetary system.
  • HM Treasury and the Financial Services Authority, under the terms of the Memorandum of Understanding, to pursue financial stability.

 

The Bank will also play its part in promoting an open and internationally competitive financial centre in the UK, using its expertise to help make the UK financial system more efficient, where such efforts would be in the public interest and provided that they do not conflict with its primary responsibilities or those of other agencies. 

 

This article has been reprinted with the authorization of the Bank of England