VII. Summarize the following passage in about 100 words and an appropriate

Title

 

As the central bank of the United Kingdom, the Bank is committed to promoting the public good by maintaining a stable and efficient monetary and financial framework as its contribution to a healthy economy. In pursuing this goal, it has three core purposes; achieving them depends on the work of the whole Bank.

• Maintaining the integrity and value of the currency. Above all, this involves securing price stability as a precondition for achieving the wider economic goals of sustainable growth and employment. The Bank does this by influencing decisions on interest rates, on the basis of economic and financial analysis of developments both at home and abroad; by participating in international discussions to promote the health of the world economy; by implementing agreed policy through its market operations and its dealings with the financial system; and by maintaining confidence in the note issue.

• Maintaining the stability of the financial system, both domestic and international. The Bank seeks to achieve this through supervising individual institutions and markets; through monitoring the links between financial markets; through analyzing the health of the domestic and international economy; through co-operation with other financial supervisors, both nationally and internationally; and through promoting sound and efficient payment and settlement arrangements. In exceptional circumstances, the Bank may also provide or organize last resort financial support where this is needed to avoid systemic damage.

• Seeking to ensure the effectiveness of the UK's financial services. The UK needs a financial system that offers opportunities for firms of all sizes to have access to capital on terms that give adequate protection to investors, and which enhances the international competitive position of the City of London and other UK financial centers. The Bank aims to achieve these goals through its expertise in the market place; by acting as a catalyst to collective action where market forces alone are deficient; by supporting the development of a financial infrastructure that furthers these goals; by advising HM Government; and by encouraging British interests through its contacts with financial authorities overseas.

Because the Bank is a national institution, its three core purposes relate primarily to the UK. Achieving them requires it not only to understand the international developments that may have a bearing on them, but also to co-operate actively with other monetary authorities and international organizations.

 

VIII. Write a memorandum.

 

You are given the Bank’s structure. You are asked to play the role of the press secretary of the Bank of England and using the following data, make up a plan of your speech at the briefing on the structure of the Bank.

 

The Bank’s organization

The Governor

Auditor

The Deputy Governor

Legal Unit – Len Berkowitz

Printing Works

Centre for Central Banking Studies

Advisors to the governors

Special Investigations Unit – Ian Watt

European & Parliamentary Affairs – Sir Peter Petrie

Mervin King (Executive Director)

Ian Plenderleith (Executive Director)

Alastair Clark (Executive Director)

Michael Foot (Executive Director)

Monetary & Financial Statistics

Monetary Analysis

Banking & Market Services

Market Operations

Financial Structure

Supervision & Surveillance

Philip Turnbull (Head of Division)

Bill Allen (Deputy Director)

Graham Kentfield (Deputy Director)

John Townend (Deputy Director)

John Footman (Deputy Director)

Oliver Page (Deputy Director)

Monetary Assessment & Strategy

Banking Services

_

Gilt-Edged & Money Market

Markets & Trading Systems

Major UK Banks

Monetary Instruments & Markets

Market Services

_

Foreign Exchange

Financial Intermediaries

UK Banks & Enforcement

Structural Economic Analysis

Business Finance

Capital & Wholesale Markets

Conjunctural Assessment & Projections

Registrar’s

Payment & Settlement Policy

North America & Japan

Inflation Report & Quarterly Bulletin

Financial Stability Projects

Europe

Emerging Markets (North)

Europe

Emerging Markets (South)

Operations

Monetary Stability Wing Liaison

Regulatory & Supervisory Policy

Monetary stability

Financial stability

Personnel, Finance & Secretariat

Personnel

Finance and Resources

Secretariat

Merlyn Lowther (Personnel Director)

Gordon Midgley (Deputy Director)

Peter Rogers Secretary of the Bank

THE COURT OF DIRECTORS

Members of Court   Eddie George (Governor) Howard Davies (Deputy Governor) Sir David Scholey, CBE (Chairman, Swiss Bank Corporation International Advisory Council) MervynKing (ExecutiveDirector) Sir David Lees (Chairman, Courtaulds plc Chairman, GKN plc) Sir Colin Southgate (Chairman, EMI Group plc) Frances Heaton (Director, Lawrd Brothers & Co., Ltd) Sir Chips Keswick (Chairman, Hambros Bank Ltd) Sir David Cooksey (Chairman, Advent Ltd) Dame Sheila Masters, DBE (Partner, KPMG) Ian Plenderleith (Executive Director) Neville Simms (Deputy Chairman and Group Chief Executive, Tarmac plc) Sir David Simon, CBE* (Chairman, The British Petroleum Company plc) Michael Foot (Executive Director) Sir John Hall (Chairman, Newcastle United Football Company Ltd) John Neill, CBE (Deputy Chairman and Group Chief Executive, Unipart Group of Companies) Andrew Buxton (Group Chairman, Barclays plc) Alastair Clark (Executive Director)

The Bank's Court of Directors consists of a Governor, a Deputy Governor and 16 Directors, up to four of whom may have executive responsibilities in the Bank. Members of Court are appointed by the Crown - Governors for terms of five years and Directors for four years. Court is responsible under the Charter of the Bank of England for the affairs of the Bank - that is, setting the strategic direction of the Bank as a corporation, and ensuring in particular that the Bank's resources are effectively deployed in pursuit of its key responsibilities. Court does not take decisions on monetary policy but acts as a source of advice for the Governor on business and market conditions. Court's main meetings are held monthly, but shorter weekly meetings are also held. Court has delegated to the Executive the Bank of England's powers under the Banking Act 1987 and other supervisory legislation. It is thus not concerned with taking day-to-day decisions on supervisory cases, though it receives regular reports on the operation of the Banking Act and on resources in Supervision and Surveillance. Court also has annual meetings with the Board of Banking Supervision, which is separate from Court and is established under the Banking Act 1987. The Board consists of the Governor, the Deputy Governor and the Executive Director for supervision, together with six lay members drawn from the banking, legal and accountancy professions. During the year. Sir David Scholey, one of the Bank's Non-Executive Directors, was appointed as a lay member of the Board. The lay members give advice to the ex-officio members on supervisory policy and on individual supervisory cases. The Board publishes its own Annual Report.

 

THE EXECUTIVE

 

Governor's Committee   Eddie George (Governor) Howard Davies (Deputy Governor) MervynKing (ExecutiveDirector, Monetary Stability) Ian Plenderleith (Executive Director, Monetary Stability) Michael Foot (ExecutiveDirector, Financial Stability) Alastair Clark (Executive Director, Financial Stability)   Advisers to the Governors Len Berkowitz (Head, Legal Unit) Sir Peter Petrie (Europeanand Parliamentary Affairs) Ian Watt (Head, Special Investigations Unit)   Management Committee Howard Davies (Deputy Governor) Bill Alien (Deputy Director, Monetary Analysis) John Footman (Deputy Director, Financial Structure) Graham Kentfield (Deputy Director, Banking and Market Services) Gordon Midgley (Deputy Director, Finance and Resources) Oliver Page (Deputy Director, Supervision and Surveillance) John Townend (Deputy Director, Market Operations) Merlyn Lowfher (Personnel Director)

Under Court, the Bank's senior policymaking body is the Governor's Committee, comprising the Governors and Executive Directors. Members of the Governor's Committee also meet, with officials, as Policy Committee to deal with strategic issues. The Monetary Policy Committee, which includes Heads of Division in the Monetary Stability Wing, meets each month to discuss the Bank's advice to the Chancellor on interest rates. Detailed implementation of policy, and internal administration of the Bank, is the responsibility of Management Committee, which is chaired by the Deputy Governor and comprises the Deputy Directors and the Personnel Director. The Bank's broad organizational structure is shown in the chart on page 20. The names of the key heads of function are given in the Operational Reviews. The distribution of the Bank's resources is also shown in the Operational Reviews and is discussed in more detail in the Finance and Resources section of this Report on pages 50 to 52.

 

IX. Meanings.

Read the passage below and explain the meanings of the words and phrases which have been underlined.

 

The Monetary Analysis Divisions provide the economic analysis, which supports the Bank's work in pursuit of monetary stability. That includes the continuous analysis of the monetary and economic situation in the UK and overseas. Other aspects of the work are the analysis of structural economic issues affecting longer-term economic performance, including the industrial and social consequences of monetary policy; analysis of alternative monetary policy strategies; analysis of techniques for implementing monetary policy; and extraction of information about financial market expectations from financial asset prices. The plans for EMU have a large bearing on much of the work, and the Divisions contribute to preparatory work on EMU by the European Monetary Institute and the European Union Monetary Committee, and participate in other international forums.

The main published output of Monetary Analysis is the quarterly Inflation - Report, which aims for a high reputation as a comprehensive and rigorous account of the factors affecting inflation in the UK, and which includes the analysis and projections, which underlie the Bank's advice to the Chancellor of the Exchequer on monetary policy.

The Monetary Analysis Divisions undertake extensive research to help maintain and develop the quality of the Bank's policy advice. Much of the research is published as speeches or articles or in summary form in the Quarterly Bulletin and in working papers published by the Bank, as well as in the proceedings of conferences in which members of the staff have participated. Over the past -year, the Bank has published research in the Quarterly Bulletin on a range of subjects including:

- Monetary aggregates: the significance of broad money and the demand for Divisia money.

- Monetary policy strategies: how should central banks reduce inflation, the benefits of low inflation, the significanceof simple monetary policy rules, and international monetary policy co-ordination.

- The differential industrial impact of monetary policy.

- The construction of yield curves for G7 countries and the application of yield curve techniques to recent developments in bond yields.

- Exchange rate behaviour.

- The probability distributions attached by the market to future asset prices, deduced from option prices.