Broadening Future Perspectives at the Bank of England

Leaders at the U.K’s central bank sought to broaden their thinking about future risks and opportunities. Here’s how they built longer-term horizon-scanning capabilities and what they learned along the way.

- By Jacqueline Koay, John Lewis, Julia Giese, and Melissa Davey

ORGANIZATIONS EVERYWHERE ARE finding it ever more challenging to navigate uncertainty in a fast-changing world. For central banks, which serve as the bulwarks of every nations' economic stability, the ability to anticipate future risks and opportunities is particularly critical to making deeply consequential decisions.

Indeed, many central banks were born in response to upheavals as profound as — and challenges as novel as — those facing business leaders today. In 1608, the Bank of Amsterdam, the forerunner of what we now call central banks, was formed to counter debasement of coinage and facilitate international payments for burgeoning foreign trade. In 1668, to restore trust in the financial and monetary system following the collapse of Stockholms Banco and the resulting financial crisis, Sweden founded the world's first central bank, the Riksbank. And in 1694, the Bank of England was founded to help finance the country's Nine Years' War with France.

“The Old Lady of Threadneedle Street,” as the bank is affectionately nicknamed, began as a private institution with note-issuing privileges, which it received in return for raising funds for the government. Over time, it gradually took on the key functions of a modern central bank, such as setting and implementing monetary policy, ensuring a stable financial system as lender of last resort, regulating financial institutions, and facilitating interbank settlements. Today the bank is publicly owned and operates within a remit set by the government; debt management is handled by a separate agency, the Debt Management Office. In common with its central banking peers, the bank’s main role is to act as guardian of monetary and financial stability in the economy.