At the time, there was excitement about the idea that a stable banking system could be a source of liquidity to fund the expansion of the economy. So in addition to being the government’s banker, the Bank also engaged in commercial activities: taking deposits in exchange for which it issued notes – and providing loans by discounting commercial bills. That was 321 years ago. The Bank of England you see today has its roots in a relatively more recent act of Parliament. I refer of course to the 1844 Bank Charter Act, which paved the way for the Bank to become the monopoly supplier of bank notes, and effectively responsible for monetary policy in the UK. The Act also had the effect of limiting the amount of commercial business the Bank could undertake, so it chose to concentrate not on competing with the emerging joint-stock and clearing banks, but instead to focus on its role  BIS central bankers’ speeches  1  as banker to the banks, and supplier of liquidity of last resort. It could be argued that this was the point at which the Bank’s financial stability role was born. In subsequent years, as the Bank sought to define this role, it was helped by the advice of Walter Bagehot, a keen student – and sometime critic – of the Bank of England’s reaction to banking crises over history.
With prices remaining stable, interest rates low and a good level of competitiveness, our economy is well equipped to resume a brisker growth trajectory in line with the global economy. 4  BIS Review 30/2005  As in the past, however, the international environment remains fraught with uncertainty at both the economic and monetary level. The independent course steered by the National Bank has made it possible to create a monetary framework conducive to the development of our economy. This success hinges not only on the correct interest rate decisions, but also on the credibility conferred upon us by our autonomy of action and by sufficient resources for intervening in the markets. It is in the nation's interest to preserve this achievement. Thank you for your attention, and for your interest in the Swiss National Bank and its activities. BIS Review 30/2005  5