Could the BoE ever go bankrupt?

fimonkey

Just wondernig if it's possible for the BoE to go bankrupt, after all it seems to be guaranteeing pretty much every other bank system at the moment and accepting bad debt as collateral (credit card loans etc).

If it can't ever be made bankrupt, why not?

What would happen in the UK if it did?

Could teh Government even be made bankrupt? If so, what would happen then?

Serious questions, not at all trying to scare monger, just sitting, watching and learning heaps in these strange times.

Thanks in advance for sensible answers

deaglecat

I don't believe so. Basically if they need more money then they can borrow and increase the national debt. They have the power to issue bank notes - if they do that too much then the pound falls but IMHO the BoE cannot and will not fail.

[Deleted User]

The BOE control the money supply, they print the money, they back good loans as lender of last resort.

They cant go bust but they can make sterling worthless abroad and destroy the economy if things go crazy.

I suspect that the rest of the world is in bigger trouble though ;-) IMO

casper_uk

No they control the printing press, need another £10 billion sir? No problem, i will just turn the machine on.

BallandChain

Who would have thought Barings Bank would go bust many years ago, or the recent Northern Rock, Bradford & Bingley, Lehman Bros, Iceland fiasco would happen! Never say never. Anything is possible in these uncertain times.

I was doing a google search about Bear Stearns and came across a thread back at MSE:

http://forums.moneysavingexpert.com/showthread.html?t=1153323&highlight=bear

Some of it is so prophetic.

Masomnia

BallandChain wrote: »

Who would have thought Barings Bank would go bust many years ago, or the recent Northern Rock, Bradford & Bingley, Lehman Bros, Iceland fiasco would happen! Never say never. Anything is possible in these uncertain times.

I was doing a google search about Bear Stearns and came across a thread back at MSE:

http://forums.moneysavingexpert.com/showthread.html?t=1153323&highlight=bear

Some of it is so prophetic.

There's more than a slight difference between retail/investment/merchant banks and the national bank.

csiman

They dont actually print the money these days. They type the amount into a computer and transfer the debt electronically to the treasury!

somabc

Of course the BOE can go bankrupt but if that happens we will be fighting in the streets for food, so don't worry about it.

The BOE can print as many pounds as it wants, the only problem would be if nobody wanted to buy these pounds, resulting in massive inflation and no foreign goods, eg Zimbabwe or (possibly) Iceland.

amcluesent

The BoE can get into a pickle. The last time Labour inflated the money supply and let rip with inflation was in 1976 when Sterling collapsed. 'Sunny' Jim Callaghan humiliated Britain (a.k.a 'the sick man of europe') by having to beg for an emergency loan from the IMF. Labour turned Britain into a banana-republic without any bananas. Sound familiar?

Labour's not working. Again.

mdean

That is true ....but HMG takes £600bn in tax per year ......even now you can borrow a lot with that ....and govt bond issues were last weeks safe haven

mdean

amcluesent wrote: »

The BoE can get into a pickle. The last time Labour inflated the money supply and let rip with inflation was in 1976 when Sterling collapsed. 'Sunny' Jim Callaghan humiliated Britain by having to beg for an emergency loan from the IMF. Labour turned Britain into a banana-republic without any bananas. Sound familiar?

Labour's not working. Again.

...and the tories did so much better on black wednesday.......18% interest rates......the poll tax.....3 million on the dole ...closing industry .....and deregulating the banks
who is not working?