The financial sector (OCR A-Level Economics): Flashcards
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15 cards from this deck
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Practise the cards
15 cards from this deck
Universal Banks
Universal Banks
Offer wide range of retail & wholesale banking services
Systemic risk
Systemic risk
Failure of one bank can bring down others worldwide
PRA: level & role
PRA: level & role
Micro level; supervises firms' safety & soundness
FCA: focus
FCA: focus
Consumer integrity & fairness; addresses asymmetric info
FPC: level & role
FPC: level & role
Macro level; identifies risks, conducts stress tests
Capital Adequacy Ratio
Capital Adequacy Ratio
Bank capital as % of risk-weighted capital
IMF function
IMF function
Financial stability & short term emergency loans
World Bank function
World Bank function
Long term financing for infrastructure & development
3 purposes of financial regulation
3 purposes of financial regulation
Stability, fairness, efficiency
Financial regulation methods
Financial regulation methods
Legislation, supervision, enforcement, surveillance, protection
Central bank: lender of last resort
Central bank: lender of last resort
Provides liquidity to banks during crises
Central bank: monetary policy
Central bank: monetary policy
Regulates money supply & interest rates
Central bank: currency role
Central bank: currency role
Issues currency, maintains confidence in national currency
Central bank: foreign exchange role
Central bank: foreign exchange role
Manages reserves & stabilises exchange rates
PRA: which institution?
PRA: which institution?
Bank of England