The Bank of England increasingly reached the news as inflation hit the United Kingdom and it had to impose measures to help combat it, setting a global standard. It holds a prominent position as one of the
. The BoE fulfills various key roles such as supervising the country's monetary policy, regulating banks, and upholding financial stability via its asset management, control of the money supply, and implementation of open market operations. Despite a slight decrease compared to 2022, the total assets of the central bank remained
The role of the Bank of England
The Bank of England undertakes various crucial tasks, such as conducting open market operations, which include the purchasing and selling of government securities to impact interest rates and the money supply. Additionally, the BoE regulates the money supply by adjusting the monetary base and the
amount of currency in circulation. An illustrative example of this was the quantitative easing introduced in 2020 as a response to the COVID-19 pandemic, leading to a
sharp increase in the M1 money supply. In 2022, when inflation began to rise, the Bank of England (along with most central banks in the world) responded by
gradually increasing interest rates to reduce the potential risks to the economy. As a result, by the end of 2023, inflation dropped to 4.2 percent, and the central bank interest rate remained unchanged at 5.25 percent between August and December.
Central banks in Europe
Between 2019 and 2021, the five largest central banks in Europe – Germany, France, Italy, England, and Spain – experienced
significant expansions in their asset holdings. However, this trend took a turn in 2022, with all of them registering slight decreases in their asset volumes. This shift aligned with a period of heightened inflation across the region, urging the major central banks to respond swiftly and decisively. Faced with soaring inflation rates, central banks in Europe and other major economies implemented exceptionally
sharp and rapid increases in interest rates to maintain economic stability. In the European Union, Hungary had by far the highest central bank interest rate in 2022 and 2023, but every other member state experienced
regular increases in the central bank rates.
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