Unit 1 - UK FS sector (2 of 80) Flashcards
Government’s economic policy 4 aims?
1) Achieve sustainable growth
2) Control Inflation
3) Full employment (low unemployment)
4) Manage the BofP
Official term for UK budget deficit?
Public Sector Net Cash Requirement (PSNCR)
Balanced budget multiplier?
Raising tax and expenditure by the same amount
When is the UK budget each year?
Autumn
Fiscal policy vs monetary policy?
Fiscal - taxation, public borrrowing & spending
Monetary - supply of money via interest rates
Who sets interest rates in UK?
Monetary Policy Committee (MPC) of the BoE
Who’s in the MPC?
9 members
Governor
2 x Deputy Governor
BoE Chief Economist
Executive Director
4 x External Members (appointed by Chancellor)
(meet 8 times per year)
Primary vs Secondary Markets?
Primary = the market for new shares & securities (debt)
Secondary = mechanism for investors to sell/switch investments
Current vs. Capital Account?
Current A/C = Tangible transactions i.e. imports and exports
Capital A/C = Net balance of Int’l Investments
SEC Mission (4 points)?
Protect investors,
Maintain fair, orderly & efficient markets
Facilitate capital formation
Promoting disclosure of market info
Role of the Fed?
Setting monetary policy (borrowing from and lending to banks etc)
Office of Currency Comptroller’s role?
Supervising and regulating all national banks
What is FINRA?
Financial Industry Regulatory Authority = regulator of all securities firm
CFTC’s role?
Regulating derivatives markets
3 EU Regulators?
European Insurance and Occ Pensions Authority (EIOPA)
European Banking Authority (EBA)
European Securites and Markets Authority (ESMA)
Asian Regulators?
China - CSRC & CBIRC
HK - SFC & HKMA
Japan - FSA
Singapore - SIC
How does QE work?
1) Central banks buy government debt from banks
2) Banks lodge proceeds with counterparty bank increasing deposit holdings
3) Counterpark increase deposits at central bank
BoE’s Money Market Operations 2 objectives?
1) Implement monetary policy via overnight interest rates
2) Reduce Disruption to commer ial bank’s liquidity and payment services
Narrow vs Broad Money?
Narrow money – a term used to describe the total sum of all financial assets (including cash) which are immediately liquid (i.e. not fixed deposit)
Broad money – in contrast, this term is used to describe the total sum of a wider range of assets – including some which are not as liquid as those falling within the definition of narrow money. It may include, for example, money held in savings accounts which are not instant access accounts.
M0 vs M4?
M0 is the measure of notes and coin in circulation outside the BoE, plus operational deposits at the BoE.
M4 is the measure of notes and coin in circulation with the public, plus sterling deposits held with UK banks and building societies by the rest of the private sector.
What is National Income?
‘the sum of all incomes of residents in the UK which arise as a result of economic activity, from the production of goods and services’ e.g. rent, wages and company profit
National Income uses?
1) Measuring the standard of livnig in a country
2) Comparing the wealth of different countries
3) Seeing long term trends
GNP and formula?
GDP + net property income from abroad
GDP = C + I + G + (X - M)
Role of Financial Stability Board?
Monitors and makes recommendations about the global financial system.
