page_title: United Kingdom enterprise law
section_title: Banking
hierarchical_section_title: United Kingdom enterprise law / Specific enterprises / Banking
caption_attribution_description: English: Long exposure photograph of the small square outside the Royal Exchange, at the junction of Threadneedle Street and Cornhill. A bus travels west on Threadneedle Street. I like how the couple in the centre are (almost) static hugging while the world rushes by.
context_page_description: United Kingdom enterprise law concerns the ownership and regulation of organisations producing goods and services in the UK, European and international economy. Private enterprises are usually incorporated under the Companies Act 2006, regulated by competition law and insolvency law, while almost one third of the workforce and half of the UK economy is in enterprises subject to special regulation. Enterprise law mediates the rights and duties of investors, workers, consumers and the public to ensure efficient production, and deliver services that UK and international law sees as universal human rights. Labour, company, competition and insolvency law create general rights for stakeholders, and set a basic framework for enterprise governance, but rules of governance, competition and insolvency are altered in specific enterprises to uphold the public interest, as well as civil and social rights. Universities and schools have traditionally been publicly established, and socially regulated, to ensure universal education. The National Health Service was set up in 1946 to provide everyone with free health care, regardless of class or income, paid for by progressive taxation.
context_section_description: UK banking has two main parts. First, the Bank of England administers monetary policy, influencing interest rates, inflation and employment, and it regulates the banking market with HM Treasury, the Prudential Regulation Authority and Financial Conduct Authority. Second, there are private banks, and some non-shareholder banks (co-operatives, mutual or building societies), that provide credit to consumer and business clients. Borrowing money on credit (and repaying the debt later) is important for people to expand a business, invest in a new enterprise, or purchase valuable assets more quickly than by saving. Every day, banks estimate the prospects of a borrower succeeding or failing, and set interest rates for debt repayments according to their predictions of the risk (or average risk of ventures like it). If all banks together lend more money, this means enterprises will do more, potentially employ more people, and if business ventures are productive in the long run, society's prosperity will increase. If banks charge interest that people cannot afford, or if banks lend too much money to ventures that are unproductive, economic growth will slow, stagnate, and sometimes crash. Although UK banks, except the Bank of England, are shareholder or mutually owned, many countries operate public retail banks (for consumers) and public investment banks (for business). The UK used to run Girobank for consumers, and there have been many proposals for a "British Investment Bank" (like the Nordic Investment Bank or KfW in Germany) since the financial crisis of 2007–2008, but these proposals have not yet been accepted.
  The Bank of England provides finance and support to, and may influence interest rates of the private banks through monetary policy. It was originally established as a corporation with private shareholders under the Bank of England Act 1694, to raise money for war with Louis XIV, King of France. After the South Sea Company collapsed in a speculative bubble in 1720, the Bank of England became the dominant financial institution, and acted as a banker to the UK government and other private banks. This meant, simply by being the biggest financial institution, it could influence interest rates that other banks charged to businesses and consumers by altering its interest rate for the banks' bank accounts. It also acted as a lender through the 19th century in emergencies to finance banks facing collapse. Because of its power, many believed the Bank of England should have more public duties and supervision. The Bank of England Act 1946 nationalised it. Its current constitution, and guarantees of a degree of operational independence from government, is found in the Bank of England Act 1998. Under section 1, the bank's executive body, the court of directors is "appointed by Her Majesty", which in effect is the prime minister. This includes the Governor of the Bank of England (currently Mark Carney) and up to 14 directors in total (currently there are twelve, nine men and three women). The governor may serve for a maximum of eight years, deputy governors for a maximum of ten years, but they may be removed only if they acquire a political position, begin to work for the bank, are absent for over three months, become bankrupt, or "is unable or unfit to discharge his functions as a member". This makes removal hard, and potentially judicially reviewable. A sub-committee of directors sets pay for all directors, rather than a non-conflicted body like Parliament. The Bank's most important function is administering monetary policy. Under the Bank of England Act 1998 section 11 its objectives are to (a) "maintain price stability, and (b) subject to that, to support the economic policy of Her Majesty’s Government, including its objectives for growth and employment." Under section 12, HM Treasury issues its interpretation of "price stability" and "economic policy" each year, together with an inflation target. To change inflation, the Bank of England has three main policy options. First, it performs "open market operations", buying and selling 
caption: The Bank of England acts as the UK's central bank, influencing interest rates paid by private banks, to achieve targets in inflation, growth and employment.
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