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This study note looks at the regulatory system for finance in the UK in the aftermath of the Global Financial Crisis.
"The FPC acts as the UK’s macroprudential authority. It is tasked with ensuring that emerging risks and vulnerabilities across the financial system are identified, monitored and effectively addressed"
When a bank fails, it can create problems for the economy. That’s why we regulate them – to keep your money safe. Read more in our #BoEKnowledgeBank guide. https://t.co/olqzdksICq pic.twitter.com/VwTesPdEDa
— Bank of England (@bankofengland) September 13, 2018
Distinguish between the roles of the Monetary Policy Committee and the Financial Policy Committee
The role of the MPC is to use monetary policy (i.e. changes in interest rates and control of the money supply) to achieve the government’s inflation target.
The role of the FPC is to identify risks and weaknesses within the UK financial system. It may ask commercial banks to raise or retain more capital as a buffer in the case of a liquidity problem. The FPC also carries out regular stress tests on the stability of the UK financial system.
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