4.4.3- Centrals Banks Role

Question 1

What are some examples of central banks?

Answer 1

-bank of England
-European central bank
-united states federal reserve
-bank of Japan

Question 2

What are the main roles of the central bank?

Answer 2

-banker to the government
-bank to other banks
-regulate the financial system
-controls monetary policy

Question 3

How is the central bank a bank to the government?

Answer 3

-manage govt debt
-buy/sell govt bonds
-hold gold + foreign exchange reserves

Question 4

How is the central bank a bank to other banks?

Answer 4

-lender of last resort
-lends banks money if they are on the brink of collapsing to prevent system risk

Question 5

How is the central bank a regulator in the financial system?

Answer 5

prevents banks undertaking activities which harm consumers

Question 6

How does the central bank control monetary policy?

Answer 6

Through interest rates and controlling the money supply

Question 7

What types of financial regulation can there be?

Answer 7

banning market rigging, preventing the sale of unsuitable products, max interest rates

Question 8

What are the 3 bodies for financial regulation?

Answer 8

-FCA
-PRA
-FPC

Question 9

What is the Financial Conduct Authority?

Answer 9

Protects consumers, promotes competition and prevents market rigging

Question 10

What is the Prudential regulation authority?

Answer 10

Ensures competition , ensures consumers have access to services, minimises risk should a bank fail and ensures banks take responsible action

Question 11

What is the financial policy committee?

Answer 11

Identifies and reduces systemic risk and supports gov economic policy