A balancing act in public ownership: the quiet legacy of the Bank of England Act 1946

Andrew Hewitt

Sunday 1 March 2026 was the 80th anniversary of the Bank’s coming into public ownership, following the Bank of England Act 1946. It was the first of eight major nationalisations by the post-war Labour government and the only one not to be later reversed, in whole or in part. Some opponents, at the time, were said to consider it a revolutionary ‘measure of first-class importance’; others considered it inconsequential. Although it was a defining point in UK financial history, it did not feature highly in the public consciousness. Yet it laid enduring foundations for the Bank’s operational and financial independence, carefully balancing powers to act in the public interest with limits on political interference.

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The quantity theory of crypto: what is Bitcoin worth as a medium of exchange?

John Lewis

The recent near halving of Bitcoin’s price has reignited debate about its true value. As a store of value, net present value asset pricing models suggest it should be worth zero because it pays no dividend. Yet its price remains far above zero, and its total value is still large despite recent turbulence. In this post I explore the question: what’s Bitcoin’s value as a means of exchange? I show that using a simple quantity theory of money framework helps explain its extreme volatility, the powerful influence of sentiment, how prices can surge even when transaction usage is low, and – crucially – why innovations by competitors and limited retail payment adoption pose significant downside price risks.

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Agentic commerce and the battleground for new payments infrastructure

Prem Munday

Agentic commerce, where artificial intelligence (AI) systems act on behalf of users to find products, negotiate purchases, and execute payments, is developing rapidly. This creates shared responsibility: developers must build legally sound systems, while regulators and infrastructure operators must consider how existing frameworks apply and where new approaches may be needed. The Bank of England operates, oversees and is co-ordinating the design of payment systems as part of its statutory responsibilities. Emerging agent‑based payments can have implications for how the private sector safely innovates and how regulators and payment infrastructure providers adapt. This post explores how agentic commerce could reshape future payment design.

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Financial markets point to very data-dependent monetary policy

Nades Raviraj and Danny Walker

Big and uncertain shocks have pushed UK inflation above the 2% inflation target over the past few years. How did financial markets view the Monetary Policy Committee’s (MPC’s) monetary policy during this unprecedented period? We show that markets have come to perceive the MPC’s policy stance as increasingly dependent on data releases. In particular, the responsiveness of UK market rates in tight windows around data releases rose significantly from 2022 to 2025. Zooming out to longer time windows in between MPC meetings, the change in services inflation explained a historically large share of the overall change in market rates over the same period.

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Climate change increases bilateral trade costs (through its impact on maritime shipping)

Maximilian Huppertz

It is well established that climate change affects productivity, but its effects on trade costs have not been studied. Ignoring these and focusing solely on productivity could lead to an underestimate of its overall impact. It could also create a source of climate-related risk, with the potential to affect the financial system through trade finance and insurance. In a recent Staff Working Paper, I show that climate change indeed affects trade cost, driven by its impact on maritime trade in particular. Focusing on productivity alone leads to a roughly 9% underestimate of the overall impact. My methodology is easy to embed in studies of the overall impact of climate change.

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Under one roof: housing and inflation expectations

Vedanta Dhamija, Ricardo Nunes and Roshni Tara

Inflation has been widely discussed in recent years, from supermarket aisles to newspapers. But what if what people think inflation is stems not only from grocery prices or energy bills, but from more? Our analysis in Dhamija et al (2026) shows house prices matter in this context, ie housing is salient. Using household surveys for the United States, we find that people tend to overweight their expectations about house prices when thinking about inflation with a coefficient of 25%–45%, significantly above the weight of house prices in the inflation index. Should central banks care about this? The short answer is yes.

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Opening the floodgates? Modelling spillovers from flood insurance protection gaps to UK mortgages

Will Banks and Kemal Erçevik

When extreme weather hits, households typically turn to insurers to cushion the financial blow. But rising temperatures and greater exposure in high-risk areas could test the insurance sector’s capacity to absorb such losses. As the Financial Policy Committee has highlighted, climate change could create insurance protection gaps, leaving households vulnerable and shifting risks across the financial system. We have built a model to estimate potential protection gaps, finding that – under conservative assumptions – the share of UK mortgagors uninsured could increase from 5% today to around 7%–10% in 2050, or up to 16% following a severe flood event. While this would have substantial welfare implications, our model suggests the aggregate impact on lenders would be small compared to previous financial crises.

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Money talks, broadly speaking

Aaron Clements-Partridge and Ryland Thomas

Broad money aggregates failed policymakers when used as an intermediate target in the 1980s, but they appeared to predict the post-pandemic inflation. Where does that leave their role in setting monetary policy today? That was the topic of a recent workshop hosted by the Bank on ‘Analysing the Information Content of Money’ which brought together academic experts and central bank staff to review the evidence. In this blog we offer our key takeaways from the workshop. We argue that there is value in understanding developments in the broad money data. While it shouldn’t assume special status, money provides an alternative lens through which to assess and communicate medium-term risks to the inflation outlook.

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Stress-free spending: why payment choice matters for disabled people

Lily Smith

Research on payment preferences in the UK has rarely explored how preferences and experiences vary by disability type, often treating disabled people as a homogenous group. Recent Bank of England research addresses this gap by focusing on the payment preferences and behaviours of different disability types and shows that, for disabled people, payment choice is crucial for reducing stress, building confidence, and supporting independence.

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What machines taking over pricing means for central banks

Anthony Savagar, Misa Tanaka and Jagdish Tripathy

With increased availability of big data and computing power, more firms are adopting algorithmic and AI-powered pricing to adjust prices rapidly in response to changing economic conditions over time and across consumers. This post reviews the existing research, draws implications for central banks, and identifies areas for further research on this topic. The research reviewed here was also used to inform Lombardelli and Patel (2026). The existing research suggests that new pricing technologies will lead to faster pass-through of shocks to prices, greater market segmentation, and may improve the inflation-output trade-off for monetary policy makers. To ensure price stability, central banks will need to monitor granular, high-frequency price data to gauge the impact of shocks on prices and inflation expectations.

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