role of central banks 4.4.3

Question 1

central banks role

Answer 1

banker to other banks of last resort/the government, holding gov debt etc
controls monetary policy through interest rates
regulates financial system (prevent financial institutions from undertaking activities that harm consumers)

Question 2

when does the central bank lend to other banks

Answer 2

if the bank is experiencing liquidity issues, they can sell illiquid assets or take a loan

Question 3

financial regulation

Answer 3

banning market rigging, preventing sale of unsuitable products, max interest rates to prevent consumer exploitation etc

Question 4

key bodies of financial regulation

Answer 4

FPC identifies and reduces system risk, supports gov policy
PRA ensures competition+consumers have access to services
FCA protects consumers, promotes competition