CHAPTER 78 CENTRAL BANKS AND FINANCIAL MARKET REGULATION

Question 1

Central banks

Answer 1

The financial institution in a country or group of countries, typically responsible for the printing and issuing of notes and coins, setting short-term interest rates, controlling monetary policy, managing the country’s gold and foreign currency reserves and issuing government dept

Question 2

Lender of last resort

Answer 2

Usually a function of a central bank, it occurs when financial institutions can obtain money from the central bank to balance their accounts when they are unable to do this from the financial markets in which they operate.

Question 3

Shadow banking

Answer 3

Parts of the financial market that are either much less regulated than the norm or are completely unregulated.

Question 4

Systemic

Answer 4

In the context of financial markets, the danger that the failure of parts of the financial system will lead to the collapse of the whole of the financial system.