It is a fascinating thing to visit the Bank of England. Walking up to the building in the City of London evokes a sense of history and substance. The institution was founded in 1694, and it has been a critical part of the global financial system for centuries.
While it is not on par with the Federal Reserve or the European Central Bank, it remains one of the most important and most respected central banks in the world.
It has been clear for the past few years that the U.K. economy and financial markets have benefited from the Bank of England’s monetary policy. If the U.K. would have joined the Euro, it would have surrendered its currency and its monetary policy to the European Central Bank. One of the clear challenges of the Eurozone has been formulating a monetary policy that fits more than a dozen independent countries.
While the European Central Bank just announced and started Quantitative Easing (QE) in recent months, the Bank of England was in sync with the Federal Reserve, and embarked on QE in 2009. This resulted in economic and financial conditions that seem more similar to those in the United States rather than in Europe. Given the comparative monetary policy over the last decade, I see no chance that the U.K. allows the Bank of England to surrender any of its authority.
The global theme remains—central banks rule the world, and this is true in the U.K.
Special thanks to Brennan Staheli, Daniel Doxey, and the Lunt Capital team for their contributions to this report.