His job will include standing in for the Governor Eddie George at ECB meetings.
The post will be taken by John Townend, the Bank's deputy director of market operations, who has been spearheading the Bank's discussions about how to respond to the introduction of the single European currency on 1 January.
The move will be seen as a covert admission by the bank of the inevitability of Britain signing up to the euro, despite the Government's insistence on sheltering behind an official policy of "wait-and-see".
It is also likely to be seen in some quarters as a defeat for both Eddie George, the governor, and his deputy Mervyn King, both confirmed Euro- sceptics who are believed to have had misgivings about formalising Mr Townend's role.
Both are said to have been dragging their feet on suggestions that the Bank should set up a permanent presence in Frankfurt to liaise with the European Central Bank.
Mr King said recently about monetary union: "You can get them to the altar on time. But you can't make them marry."
The decision to promote Mr Townend was nevertheless welcomed in the City as a highly sensible move.
Mr Townend, 51, is a well-respected economist and career Bank of England official. As well as co-ordinating the Bank's own preparations for European Monetary Union, he has been standing in for Mr George at meetings of the European Monetary Institute, the precursor of the ECB, as well as working with City institutions to ensure their preparations for EMU are up to scratch.
Julian Jessop, economist at Nikko Securities, said yesterday that in addition to the ECB's responsibility for monetary policy, there are other areas where the Bank of England would want to have some influence.
These include the Target payments system and the way that minimum reserve requirements are to be imposed on "Euroland".