Exchanges, bubbles and central banks · 1600s–1790s
1694
The Bank of England lends to the government
Investors lend £1.2 million to King William III's government in return for interest.
To pay for war with France, the English government borrowed £1.2 million from investors who formed the Bank of England in 1694. The government paid them interest year after year.
Government debt became something investors could hold for steady income and sell to others, the ancestor of today's government bonds.
💡 Why it made sense then
Governments needed large sums quickly, and lenders wanted a safe, regular income they could sell if they needed their money back.
Ideas it gave us
Practise with $10,000 in play money
Free. No real money involved.