Bank of England

In their essential book on the gold standard, Maria Cristina Marcuzzo and Annalisa Rosselli show that David Ricardo s contribution to economic theory was distinguishing between variation in the value of money and variation in price. In Ricardo s time, the Bank of England issued handwritten... 

Treasury memorandum on the gold reserves, 22 May 1914 , reprinted in R. S. Sayers, The Bank of England 1891-1944, 3 vols. (Cambridge University Press, 1976), vol. of appendices, pp.3-30. 

John Fforde, The Bank of England and Public Policy 1941-1958 (Cambridge University Press, 1992), pp. 95-124, 249-67 Pressnell, External Economic Policy, vol. I, pp. 247, 347-52, 365-6. 

Dr. Thomas Thomson14 relates that during his father s lifetime Henry Cavendish received an annuity of 500 pounds. After the death of his father and of other relatives, he became very wealthy, but as he had no extravagant tastes, he had little use for his large income. At the time of his death, he was the largest shareholder in the Bank of England, and his estate was estimated by Dr. Thomson at 1,300,000 pounds, and by Sir William A. Tilden10 at about 1,500,000 pounds. 

British oligarchy traced back to the founding of the Bank of England, and before that to an alliance with the piratical... 

Another set of figures is provided in the Bank of England s quarterly report, although it contains the same unwanted additions and deletions, and is thus relevant it shows the large vol-... 

Source Bank of England as published by Bank for International Settlements. 

London is the largest center for Eurodollar banking under the encouragement of the Bank of England, which permits the foreign branches of U.S. and other banks to hold external accounts in London without reserve requirements, and with minimal inspection. At last count, international banks had 90 billion in assets in London. The Bank of England can do as much or as little as it wants in the way of regulation, under British law. 

British bank. American banks have had pretty much a free run of it all in London, and we British rather feel that we should have the same privileges here. If the American authorities give us any trouble, the Bank of England will start exhuming skeletons from the closets of the American banks."... 

Here was a singular character who played with chemical apparatus and weighed the earth, while more than a million pounds deposited in his name in the Bank of England remained untouched. His bankers had been warned by this eccentric man not to come and plague him about his wealth, or he would immediately take it out of their hands. 

Money did exist in some camps, produced by the prisoners, but it was not a payment for work, for the workers were slave-labourers. It was a reward for good behaviour. In Sachsenhausen concentration camp another type of fake money existed. Prisoners successfully faked the Allies money in the 1940s, leading to panic on the part of the Bank of England. 

Figure 5. Top, a Russell image of a Bank of England 5 note and bottom, the same image with a piece of abraded aluminum placed behind it to detect the watermark.

Empirical studies have not pointed conclusively to one specific process as the most realistic. One study (Bank of England, 1999) states that observation of interest-rate behaviour in different markets suggests that when current interest-rate levels are low, at 4% or below, the rate process has tended to a Gaussian process, while when rates are relatively high the process is more akin to a lognormal process. At levels between these two, it would seem an intermediate ... 

Although the use of yield curves is quite common as part of mMietaiy policy analysis, central banks such as the US Federal Reserve and the Bank of England have only recently begun to forward interest rates as an indicator for monetary... 

The Bank of England uses a variation of the Svensson yield curve model, a one-dimensional paranetric yield curve model. This is similar to the Nelson and Siegel model and defines the forward rate curve/(/n) as a function of a set of unknown parameters, which are related to the short-term interest rate and the slope of the yield curve. The model is summarised in Appendix B. Anderson and Sleath (1999) assess parametric models, including the Svensson model, against spline-based methods such as those described by Waggoner (1997), and we summarise their results later in this chapter. 

In the Svensson model, there are six coefficients Pq, fii, 2. 3. 1 and T2 that must be estimated. The model was adopted by central monetary authorities such as the Swedish Riksbank and the Bank of England (who subsequently adopted a modified version of this model, which we describe shortly, following the publication of the Waggoner paper by the Federal Reserve Bank of England). In their 1999 paper, Anderson and Sleath evaluate the two parametric techniques we have described, in an effort to improve their flexibUity, based on the spline methods presented by Fisher et al. (1995) and Waggoner (1997). 

Anderson and Sleath presented a model in the Bank of England Quarterly Bulletin in November 1999. The main objective of this work was to evaluate the relative efficacy of parametric versus spline-based methods. In fact, different applications call for different methods the main advantage of spline methods is that individual functions in between knot points may move in fairly independent fashion, which makes the resulting curve more flexible than that possible using parametric techniques. In Section 5.5.1 we reproduce their results with permission, which shows that a shock introduced at one end of the curve produces xmsatisfactory results in the parametric curve. 

The Anderson-Sleath model, which is the method adopted by the Bank of England, is a modification of the Waggoner approach in a number of significant ways. The A(t) function of Waggoner was adapted thus ... 

FIGURE 5.3 Yield curves fitted using cubic spline method and Svensson parametric method, hypothetical bond yields. Reproduced with permission from the Bank of England Quarterly Bulletin, November 1999.)... 

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