Regulation of the Financial System (AQA A-Level Economics): Flashcards
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10 cards from this deck
Financial regulation
Financial regulation
Controls how banks & financial institutions operate
FPC focus (macroprudential)
FPC focus (macroprudential)
Risks affecting entire financial system
PRA focus (microprudential)
PRA focus (microprudential)
Stability of individual financial institutions
FCA's three main aims
FCA's three main aims
Protect consumers, markets; promote competition
Moral hazard
Moral hazard
Taking excessive risk as others bear the cost
Liquidity in banking
Liquidity in banking
Ability & ease to convert assets to cash
Bank capital
Bank capital
Value of assets minus liabilities (net worth)
Systemic risk
Systemic risk
Risk of entire financial system breakdown
Credit crunch trigger date
Credit crunch trigger date
9 August 2007 (BNP Paribas announcement)
Basel III agreement purpose
Basel III agreement purpose
Strengthen bank capital & liquidity requirements