Banking Industry And Business Development Of The Uk

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Since its establishment, Bank of England has played a significant role in the banking industry and business development of the UK. As a reflection on the difference between Bank of England and high street banks and the evolvement of Bank of England in recent years, this article will focus on the following issues. The first section will give an explanation of high street banks and look at the brief history of Bank of England, followed by comparing their differences in several perspectives. The second section will look at the Financial Services Act 2012 which gave the Bank of England more powers and responsibilities after the financial crisis. The third section will discuss the adjustments in governance and accountability of the Bank of…show more content…
Furthermore, the functions and operations of Bank of England and high street banks are different. By implementing the Sterling Monetary Framework, the system contributes to smoothing market rate and manages to meet the inflation target given by the Government (Bank of England, 2015). As the monopoly note issuer, the Bank provides Sterling of which the public believes its value and consequently it alleviates both shortage and fear of shortage in the market (Siklos et al, 2010). Another function regards to monetary stability is the role of “lender of last resort”, which means it can provide Emergency Liquidity Assistance to the financial institutions at stake. In addition, the Bank operates the nation’s Real Time Gross Settlement system to provide ultimate settlements for commercial banks who holds reserve accounts in the Bank of England (Manning, 2014). As to the functions of retail banks, they provide intermediation and transaction services to both individuals and companies (Greenspan, 1989). The most common ones are receiving deposit and providing loans and advances in different forms, which leads to its key function in the financial market, providing liquidity through creation of credits (Krohn, 2015). There are other derivative functions including collecting and clearing cheques, providing cash management, foreign currency risk solutions, acting as trustee or correspondent etc. All these are essential to the economic operation.
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