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The Bank of England acts as the UK's central bank, influencing interest rates paid by private banks, to achieve targets in inflation, growth and employment. The Bank of England was originally established as a corporation with private shareholders under the Bank of England Act 1694, [1] to raise money for war with Louis XIV, King of France.
The London Interbank Offered Rate (LIBOR) came into widespread use in the 1970s as a reference interest rate for transactions in offshore Eurodollar markets. [25] [26] [27] In 1984, it became apparent that an increasing number of banks were trading actively in a variety of relatively new market instruments, notably interest rate swaps, foreign currency options and forward rate agreements.
The money market is an over-the-counter (OTC) market. Banks are key players in several segments of the money market. To meet reserve requirements and manage day-to-day liquidity needs, banks buy and sell short-term uncollateralized loans in the federal funds market. For longer-maturity loans, banks can tap the Eurodollar market.
The bank provides wholesale banking services to the UK Government (and to over a hundred overseas central banks). [22] It manages the UK's Exchange Equalisation Account on behalf of HM Treasury and it maintains the government's Consolidated Fund account. [ 23 ]
Without a central exchange, currency exchange rates are made, or set, by market makers. [1] Banks constantly quote a bid and an ask price based on anticipated currency movements taking place [clarification needed] and thereby make the market. Major banks handle very large forex transactions, often in billions of units. [1]
The UK was one of the first developed economies to issue index-linked bonds on 27 March 1981. Initially only tax-exempt pension funds were allowed to hold these bonds. The UK has issued around 20 index-linked bonds since then. Like conventional gilts, index-linked gilts pay coupons which are initially set in line with market interest rates.
Axis Bank UK Limited Axis Bank: India: Bank Mandiri (Europe) Limited Bank Mandiri: Indonesia: Bank of Africa United Kingdom Plc BMCE Bank International England: Bank of America Merrill Lynch International Limited: Bank of America: United States of America: Bank of Baroda (UK) Ltd Bank of Baroda: India: Bank of Beirut (UK) Ltd Bank of Beirut ...
Across all brands the bank operates some 1800 sites in the UK. HSBC UK Bank plc is the only one of Britain's big five banks to hold more deposits than loans (loan:deposit ratio of 90%). [2] This has led to the bank being seen as a less risky proposition than the other banks by investors and customers, as it is able to fully fund its own operations.