Which institution serves as the central bank of the United Kingdom and was founded by Parliament?

• A. Federal Reserve
• B. European Central Bank
• C. Bank of Scotland
• D. Bank of England

Answer: (D)

Central banks issue currency, set monetary policy, and oversee financial stability for a country. In the United Kingdom, that institution is the Bank of England, which was established by an Act of Parliament in 1694 to fund government borrowing and create a stable financial system. It acts as the government’s banker, issues banknotes, and functions as lender of last resort, with modern policy guided by the Monetary Policy Committee to maintain price stability. The other names don’t fit this role for the UK: the Federal Reserve is the U.S. central bank; the European Central Bank runs the euro area’s monetary policy; and the Bank of Scotland is a commercial bank, not the country’s central bank.