The UK banking system: structure, regulation and effects of the 2007-09 financial crisis

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introduction of measures that can ensure the banks’ fulfilment of their responsibilities (Ellinger, Lomnicka and Hooley 2006). As regards the present financial structure in the United Kingdom, financial institutions must be authorized by the “Financial Services Authority” to accept deposits and undertake major financial transactions. The availability of an adequate level of capital and the adoption of preventive measures are the basic requirements to obtain this permission. The regulation of banking in the UK began with informal controls by the Bank of England and was eventually placed on a statutory basis by the Banking Act 1979. The 1970s also saw initiatives being taken in the sphere of banking regulation at the supranational level by the European Economic Community and the Basel Committee on Banking Supervision. The former had the aim to create a “single market” in financial services, whilst the latter was concerned with the stability of the banking sector world-wide in response to its increasing interdependence. These initiatives have had a significant impact on domestic policy. The following decades saw the passing of the Banking Act 1987 which tightened the Bank of England’s regulatory powers and the implementation of those international initiatives through related legislation (Ellinger, Lomnicka and Hooley 2006). The election of a Labour government in 1997 resulted in two momentous changes in banking regulation. First, the Bank of England Act 1998, as well as giving full responsibility for monetary police, also transferred its responsibility for authorising the banks and supervision of the banking system to the Financial Services Authority (FSA). The FSA – the old Securities and Investment Board (SIB) – was to become a “super regulator”, with responsibility for the regulation of the whole financial services sector: banking, insurance, and investment. This was achieved by the Financial Services and Markets Act 2000 (FSMA 2000). The following sections will trace the evolution of banking regulation, culminating in the changes introduced by the Banking Act 2009. 1.3 The Bank of England Before describing the most recent changes introduced by the Financial Services and Markets Act 2000 and the Banking Act 2009, which deprived the Bank of England of its role as supervisor of the UK banking system, a brief discussion of the Bank’s history will certainly throw light on how this role came about. The Bank of England Act 1694 authorized the incorporation of the Bank by means of public subscription. Originally, the objective of the Bank was to raise the money required for the war against Louis XIV of France. The Bank was to transact its business under the style of the Governor and the Company of the Bank of England.3 It was invested with perpetual succession and granted a common seal. In modern terminology, this meant that it was invested with legal status. The Bank was prohibited from engaging in general trade, but was authorized to deal in bills of exchange and in the then equivalent of promissory notes. Furthermore, it was allowed to trade in gold coins, bullion, and silver. 3 In addition, the Bank of England was granted the Bank of England Charter 1694, which was augmented and modified by the Bank of England Charter 1890, which, in turn, was revoked and replaced by the Bank of England Charter 1946.

Anteprima della Tesi di Francesca Magno

Anteprima della tesi: The UK banking system: structure, regulation and effects of the 2007-09 financial crisis, Pagina 3

Laurea liv.I

Facoltà: Economia

Autore: Francesca Magno Contatta »

Composta da 85 pagine.

 

Questa tesi ha raggiunto 487 click dal 08/04/2010.

 

Consultata integralmente 9 volte.

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