Topic 1 Flashcards
What 4 things does money need to be to be considered an acceptable medium of exchange?
1.Sufficient in quantity
2.Generally acceptable to all parties in all transactions
3.divisble into small units
4.Portable
Financial institutions offer products and services that provide benefits including
Convenience
A means of otherwise achieving otherwise difficult objectives
Protection from risk
The four elements of intermediation are
-Geographic location
-Aggregation
-Maturity transformation
-Risk transformation
Bank of England’s main functions are
-Issuer of bank notes
-Banker to government
-Banker to banks
-Advisor to government
-Foreign exchange market
-Lender of last resort
-Maintaining economic stability
Who sets intrest rates in the UK
Monetary policy Committee (MPC)
How often is the intrest rate in the UK revised?
The MPC normally meets 8 times a year to set intrest rates.
Who is responsible for issuing gilt edged securities (GILTS)
Debt management office (DMO)
What is a proprietary organisation?
Limited companies owned by shareholders who recieve dividends
What is a mutual organisation?
Mutual organisations are in effect owned by its members.
What is demutualisation?
When a mutual organisation changes to a proprietary organisation
How can you join a credit union?
You must meet membership requirements
Pay any required entrance fee
Buy atleast one £1 share in the union
How are credit unions controlled?
Through a voluntary board of directions
Are credit unions authorised and regulated?
Yes, by the FCA
Are credit unions protected with FSCS
Yes
Can credit unions pay dividends or intrest?
Yes
They can be either on savings. However to pay intrest they must have either £50,000 or 5% of total assets (whichever is greater) in reserve.
