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Saturday, March 6, 2010

Bank of English

The Bank of English is the central bank of the United Kingdom. Historically, it has been a model for banks all over the world. The bank was moved to Threadneedle Street in 1734, which is situated in the city of London.
The Bank of English holds gold as insurance in case of turmoil in the world's money markets and its reserves are worth around £4 billion. It has held gold reserves for over 300 years. In 1999, the bank undertook a major restructuring of its gold reserves and auctioned off a large portion of its holdings. This step was undertaken in order to improve the bank's portfolio and increase its holding in currency. Almost 400 tonnes of gold were sold off in this manner.
In 2007, the bank ran into trouble regarding its gold reserves and this news made headlines. Gold was held by the bank in the shape of bars as well as coins.
Since the bank of English is a central bank, its actions affect the entire economy. The gold prices at that time had been at a high since its demand was increasing day by day.
Since the gold was not in mint condition, the bank had to dispose of it at a lower price.
The Bank of English has been heavily criticised for this action, as it will affect the world's economy for many years to come. It was estimated that these sales caused the bank to lose 3.8 billion pounds.

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