Financial sector Flashcards
what is the role of the BOE?
The role of the BOE is to :
-implement monetary policy
-be a banker to the government
-banker to the commercial banks
-regulate the markets
what is the IMF and the world bank?
The role of the IMF is to help economies and there balance of payments , in order for assistance economys must follow there fiscal policies
WOrld bank is to help finance projects that will promote develpment
what is systematic risk ?
This is when a micro event at a local bank could lead to cascading effect on the whole of the economy
e.g a bank is lending out too much money, might have a risk on the whole economy.
what is the role of the FPC, PRA and FCA?
FPC:
-prevents systemtic risk by ensuring banks have enough liquidity ,bail outs on banks, ensuring finciak stability.
PRA:
-This makes sure that there is stability within risks
(set capital ratio and leverage ratio)
FPA:
-this protects consumers and ensures integrity whitin the markets
what is the use of the financial sector?
-facilitae borrowing
-facillitate saving
-facilliate forward markets
-facilitate trade
what is narrow money, what is broad money?
narrow money is money that commercial banks have depositied in the bank of england, and notes and coins in circulation.
broad money is narrow money + liquid assets that they could easily turn into cash.
what is the role of money and it charcateristics ?
The role of money is to act as a medium of exchange,deffered payment, unit of account,store value
charactristics:
-divisibility
-portable
-scarcity
-durability
what is micro finance?
adv and dis-adv
This is a scheme that helps provide finance to small scale projects in developing contries.
ADV:
-provides finance when there is lack of acess
-low intrest rate
-can relieviate poverty
dis-adv:
-could potentially charge high intrest rate
-wont relaviate that much poverty as its micro
-might not work out
what are ways the BOE can regualate markets?
-capital ratio
leverage ratio
