Topic 1 Flashcards
What is a financial intermediary?
An entity that acts as the middleman between two parties in a financial transaction.
What is disintermediation?
This process involves borrowers and lenders interacting directly rather than through an intermediary.
Name the four elements of intermediation.
- Geographic location
- Aggregation
- Maturity transformation
- Risk transformation
What are the roles of The Bank of England
- Issuer of bank notes
- Banker to government
- banker to banks
- Adviser to the government
- Foreign exchange market
- Lender of last resort
- maintaining economic stability
What are Gilt-edged securities?
Loans to the government.
What is inflation?
A sustained increase in the level of prices of goods and services
What does FCA stand for?
Financial Conduct Authority
What does FSA stand for?
Financial Services Authority
What are propriety organisations?
- limited companies
- owned by shareholders
- have the right to share in the distribution of company’s profits in the form of dividends
- Able to vote at shareholders’ meetings
What are mutual organisations?
- not constituted as a company
Previously, the Bank of England was responsible for managing new issues of gilt-edged securities. Who is now given this role? And why?
Debt Management Office which is within the treasury to avoid conflicts or interests from banks responsibility for setting interests rate.
From 1998, the Bank of England’s supervisions and regulation of institutions that make up the banking sector was transferred to which organisation?
Financial Services Authority
In the financial services act 2012, effective from 1 April 2013, divided responsibility for financial stability between the Treasury, the Bank of England and which 2 new Regulators?
The Financial Conduct Authority & the Prudential Regulation Authority
Credit Unions who choose to pay interests must show they have system and control in place and have at least £_______ or ______% of total assets?
At least £50,000 or 5% of total assets
Building societies are permitted to raise funds on the wholesale markets but are restricted to ______% of their liabilities
50%
