My Visit to the Bank of England

                                                 

      On Thursday the 18th December I visited the Bank of England Museum. It is part of the actual Bank of England building on Threadneedle Street in London.  Here is a picture of me looking wet and hungry by the museum!

     The Bank of England is the largest bank in the UK and it is also its central bank. It is not the same as most other city banks and does some jobs which most normal banks don’t do.  Here are some examples:

 

  • The Bank of England is the British government’s main bank and supplies most of their money.  Governments need banks, too!

  • The Bank of England designs and issues bank notes using lots of clever ways to make sure that it is difficult to copy or ‘forge’ banknotes. It also replaces old banknotes when they become too scruffy to be used.

  • The Bank of England keeps the British banking system safe and sound. It makes sure the systems used to move money work well and keep our money safe.

  • The Bank of England sets the interest rates for all the other banks in the UK. It lends money to them and charges them interest. It helps control inflation by changing the interest rate depending on the rate of inflation.

 

     Here are some of the highlights of my trip:

 

  • Inflation game:  The museum had a very fun game to help us understand inflation. It uses a hot air balloon sinking and rising to show this.  A depression was shown by a rainstorm hovering over the balloon, pushing it downwards. When this happened, you had to pull a red handle hanging next to you to make it rise again.   In real life this would be raising the prices and keeping them steady. When there was inflation, a cloud of hot gas rose up from a city-- also pushing against the balloon, but this time upwards.  This time you had to pull a green handle hanging on your other side to lower the balloon and keep it on the steady line of 2% rise inflation.  It really helped us see what central banks do to help the economy.

  • The Chest:  We found a large chest in one of the rooms of the museum and we wondered what it was.  It turns out that the chest is hundreds of years old and was used around the same time that the bank was founded. It was used to carry coins around Europe or the country. The clever thing about the chest was that where the keyhole was meant to be, there was a fake hole which did not fit the actual key. The real hole was on the top of the chest under a small metal circle. This was to stop robbers from stealing gold from the chest. This was part of the way that paper notes were invented. Because people often stole money from the chests, many people stopped using them and kept their money with them.  This did two things.  It left the banks with less money in them and it meant that people were travelling around with heavy coin money.  Rich people had even more money to carry around and they became targets for robbers.  Banks started to give out pieces of paper to people who put their gold in their bank.  If a bank customer wanted to buy something, the bank gave him a piece of paper showing how much money it was worth.  The customer gave it to the shopkeeper and the shopkeeper took it back to the bank to get the money.  This stopped people from having to travel around with lots of gold.  These paper notes became the bank notes that we have today.

  • Lifting a Gold Ingot:  In the museum, there was a big round room called the Rotunda which had many exhibits in it.  My favourite was a small plastic case with a real bar of gold (a gold ingot) inside of it to feel and lift up!  The ingot was one of only 8 actually inside the Bank of England itself. It was about 9-10 inches long and around 2 inches high and 3 inches wide. I put my hand into a small hole in the thick plastic case and lift up the gold bar inside. I was surprised at how extremely heavy the ingot actually was as I could hardly lift it! The current price of the gold ingot is around £240,000 (about $343,600 U.S.). It was amazing to think that I was holding that much money!

          

       

     One of the things I learned about during my visit was how hard it is to forge banknotes. There was a display in the museum telling us the different things which make a banknote hard to copy. Here are some of the ways I learned banknotes are unique…. (This is for an English pound £ note.)

 

  • The special type of paper used always feels especially crispy, never limp or waxy, even after it has been used for a while.

  • If you gently move a £5, £10 or £20 note around under a light, the silver foil will change from a clear, bright picture of Britannia to the number 5, 10 or 20 shining in it. This is called a hologram.

  • If you hold a note up to the light, you should be able to see a picture of Queen Elizabeth II in the large beige oval at the bottom of the note.

  • The lines on the note are always sharp and clear.

  • If you use a strong magnifying glass and look at the waves beneath the Queen’s portrait, you will see that they are made up of lots of different words and numbers.

                                                      

     During my travels, I found out that there is a new design being printed on the front of the pound coin, made up of a shield (a coat of arms) representing the royal family. All of the other coins are like a kind of jigsaw which, when all put together, also make the shield.
     I really enjoyed myself there and I learned a lot about English money and how it’s managed.  I can’t wait to go there again!