Part I Financial Markets, 3 UK Central Banking and Financial Stability

2021 ◽  
Author(s):  
Morton Guy ◽  
Marsh Andrew
Keyword(s):  
Central Bank ◽  
Financial Stability ◽  
Central Banking ◽  
Debt Management ◽  
National Debt ◽  
Legal Tender ◽  
Bank Of England ◽  
The Government ◽  
The Uk ◽  
William Iii

This chapter talks about the Bank of England as the UK's central bank, which was established in 1694 by a Charter granted by King William III and Queen Mary II under the authority of an Act of Parliament. It explains the principal object of the Act in creating the Bank as a vehicle for raising money for the government. It also discusses how the Bank was closely associated with the raising and management of the national debt since its inception, which is a function that the Bank retained until the creation of the UK Debt Management Office (DMO) in 1998. This chapter highlights how the Bank raised money by issuing of banknotes, which became widely used as a convenient means of making large—value payments. It points out that the Bank of England notes were not formally legal tender until 1833.

Lender of Last Resort

2019 ◽  
pp. 136-154
Author(s):  
Ulrich Bindseil
Keyword(s):  
Central Bank ◽  
Financial Stability ◽  
Debt Crisis ◽  
Central Banks ◽  
Central Banking ◽  
Lender Of Last Resort ◽  
Central Bank Money ◽  
Bank Of England ◽  
European Debt Crisis ◽  
Bank Money

The recent central banking literature often argues that the LOLR function would be the key feature defining a ‘modern’ central bank. This chapter argues that this view may appear too radical (despite the enormous benefits of the LOLR) as the appearance of the LOLR does not change the nature of central banking (which is primarily associated with the issuance of central bank money). After providing an overview of the roles of central banks for financial stability, the chapter focuses on one early LOLR episode, namely the measures of the Hamburger Bank, Bank of Amsterdam and Bank of England in the European debt crisis of 1763. It is shown that in particular the Hamburger Bank acted as systemic lender of last resort, comparable to what modern central banks did in 2008.

scholarly journals Central Bank Reserves during the Bretton Woods Period: New data from France, the UK and Switzerland

2021 ◽  
Author(s):  
Alain Naef
Keyword(s):  
Central Bank ◽  
Bretton Woods ◽  
Daily Data ◽  
Bank Of England ◽  
National Bank ◽  
Bank Reserves ◽  
The Uk

This paper presents new daily data on central bank reserves during the Bretton Woods period. It is the first paper to provide daily data for the Bank of France, Bank of England and Swiss National Bank directly from these central bank’s archives. I discuss some of the issue with these data and make them available to other researchers for further analysis.

scholarly journals Public Debt Management and The Country’s Financial Stability

Studia Humana ◽  
2021 ◽  
Vol 10 (3) ◽  
pp. 10-18
Author(s):  
Piotr Misztal
Keyword(s):  
Public Debt ◽  
Financial Stability ◽  
Management Practices ◽  
Significant Risk ◽  
Debt Management ◽  
State Budget ◽  
Domestic Capital ◽  
Public Debt Management ◽  
The Government ◽  
Polish Economy

Abstract The government debt portfolio is usually the largest financial portfolio in the country. It often contains complex and risky financial structures and can generate significant risk to the state budget and the country’s financial stability. Therefore, governments are required to have sound risk management and sound public debt structures to limit exposure to market risk, debt financing or rolling risk, liquidity risk, credit, settlement and operational risk. In recent years, the debt market crises have highlighted the importance of sound public debt management practices and related risks, and the need for an effective and well-developed domestic capital market. This may reduce the vulnerability of the economy to adverse economic and financial shocks. However, it is also important for the government to maintain a macroeconomic policy that ensures sound fiscal and monetary management. The aim of the research is to present the theoretical and practical aspects of extremely important issues such as public debt management and to indicate the most important implications for the financial stability of the country on the example of the Polish economy. The study uses a research method based on literature studies in the field of macroeconomics, economic policy and finance, as well as statistical analysis of the studied phenomenon. Results of research indicate that effective public debt management can reduce the economy’s vulnerability to financial threats, contribute to the financial stability of the country, maintain debt stability and protect the government’s reputation among investors.

The Investment Manager

2020 ◽  
pp. 275-295
Author(s):  
Einar Lie
Keyword(s):  
Central Bank ◽  
Financial Stability ◽  
Market Value ◽  
Central Banks ◽  
Rapid Expansion ◽  
Financial Wealth ◽  
Investment Manager ◽  
The Government ◽  
Traditional Roles

This chapter assesses how the management of the nation’s long-term savings in what is now the Government Pension Fund Global brought Norges Bank a brand new responsibility from the mid-1990s, and an unusual one for a central bank. While many central banks have historically played an important part in contributing to government financing and investing government debt in liquid securities, this had never been one of Norges Bank’s main roles. Indeed, one of the key aims of the acts of 1816 and 1891 was to prevent the government from funding itself through the central bank. From the mid-1990s, however, Norges Bank was in a way given the opposite task: a separate mandate to manage the country’s financial wealth on behalf of the government by investing it abroad in long-term bonds, shares, and eventually real estate. Within twenty years, thanks to high oil prices and substantial inflows from the government, the fund’s market value soared from nothing to around NOK 7 trillion. In recent years, the fund’s rapid expansion and financial importance have brought Norges Bank—and Norway—at least as much international attention as the bank’s more traditional roles in monetary policy and financial stability.

The Over-Burdened Central Bank and the Shift Away from Autonomy

2017 ◽  
Author(s):  
Pierre L. Siklos
Keyword(s):  
Monetary Policy ◽  
Central Bank ◽  
Financial Stability ◽  
Central Banks ◽  
Central Banking ◽  
Forward Guidance ◽  
Self Assessments ◽  
Crisis Conditions ◽  
Central Bankers ◽  
Influence Behavior

Many central banks took on additional responsibilities. Inadequate self-assessments remain unfinished almost a decade after the crisis erupted. Government-central bank relationships need to be conditioned on whether times are normal versus crisis conditions. Transparency confronts ambiguity when central banks must communicate the outlook and the conditionality of their decisions. Forward guidance was taken too far and ended up being futile. Central bankers simply exhausted their ability to influence behavior through mere words or ambiguous statements. This is a self-inflicted wound for institutions that are seen as overburdened. These forces leave central banking more vulnerable than is commonly acknowledged. Squaring the conventional objectives of monetary policy with the unclear aims of financial stability is difficult. Adequate limitations on the authority of central banks have yet to be thoroughly debated. We are nowhere near resolving the inherent tensions between old and new sets of central bank objectives.

scholarly journals Performing Public Credit at the Eighteenth-Century Bank of England

2019 ◽  
Vol 58 (1) ◽  
pp. 58-78 ◽  
Author(s):  
Anne L. Murphy
Keyword(s):  
Eighteenth Century ◽  
Financial Stability ◽  
The State ◽  
Secondary Market ◽  
National Debt ◽  
Personal Credit ◽  
Internal Structures ◽  
Public Credit ◽  
Bank Of England ◽  
Long Eighteenth Century

AbstractMuch is known about the negotiation of personal credit relationships during the eighteenth century. It has been noted how direct contact and observation allowed individuals to assess the creditworthiness of those with whom they had financial connections and to whom they might lend money. Much less is known about one of the most important credit relationships of the long eighteenth century: that between the state and its creditors. This article shows that investors could experience the performance of public credit at the Bank of England. By 1760 the Bank was the manager of nearly three-quarters of the state's debt and housed the main secondary market in that debt. Thus, it provided a place for public creditors, both current and potential, to attend and scrutinize the performance of the state's promises. The article demonstrates how the Bank acted to embody public credit through its architecture, internal structures, and imagery and through the very visible actions of its clerks and the technologies that they used to record ownership and transfer of the national debt. The Bank of England, by those means, allowed creditors to interrogate the financial stability and reputation of the state in the same ways that they could interrogate the integrity of a private debtor.

scholarly journals Economic Accounts and Financial Systems

2021 ◽  
pp. 1-9
Author(s):  
Ulrich Bindseil ◽  
Alessio Fotia
Keyword(s):  
Central Bank ◽  
Balance Sheet ◽  
Central Banking ◽  
Lender Of Last Resort ◽  
Financial Systems ◽  
Financial Flows ◽  
Balance Sheets ◽  
The Government ◽  
Real Assets ◽  
Bank Money

AbstractThis chapter introduces the system of accounts of the main sectors of the economy (households; non-financial corporations, the government; banks, and the central bank), describing how these sectors are interrelated through financial claims and liabilities. A financial system, consisting of commercial banks and the central bank, manages flows of funds originating from households, without these flows causing a need for the real sectors to liquidate illiquid real assets. The basic types of assets and liabilities are: real goods, gold, banknotes, deposits, bonds, loans, and equity. We explain how the shortcomings of both IOU and commodity-money based financial systems can be solved via establishing a central bank. A central bank is defined here by its balance sheet and central bank money is the central bank’s basic liability. Both monetary policy implementation and lender of last resort issues relate to liquidity flows within balance sheets. Understanding the logic of basic financial flows is therefore the basis for understanding central banking.

Part A Regulatory Matters, 8 The Market Regulators

2015 ◽  
Author(s):  
Proctor Charles
Keyword(s):  
Financial Services ◽  
Financial Stability ◽  
Credit Crunch ◽  
Market Regulation ◽  
European Level ◽  
Banking Market ◽  
Bank Of England ◽  
Regulatory Bodies ◽  
The Uk

This chapter explains the various authorities involved in UK banking market regulation. It first considers the role of the UK Financial Services Authority (FSA), including its statutory objectives and powers under the Financial Services and Markets Act 2000. It then discusses the role of the Bank of England in the fields of financial stability and monetary policy; the role of Her Majesty's Treasury; the development of regulatory bodies at the European level, largely in response to the credit crunch and the problems to which it gave rise; and some recent international initiatives.

Central Banking before the Great Recession

2018 ◽  
Author(s):  
Francesco Papadia ◽  
Tuomas Vӓlimӓki
Keyword(s):  
Central Bank ◽  
Great Recession ◽  
Financial Stability ◽  
Central Banks ◽  
Central Banking ◽  
Price Stability ◽  
Great Moderation ◽  
The Great Recession ◽  
Advanced Economies ◽  
The Interest Rate

The chapter describes the historical process as well as the analytical and empirical factors that, at the end of the twentieth century, led to the dominance, in advanced economies, of a central bank model based on an independent institution devoted to price stability as its overriding objective. The central bank pre-crisis model was elegant, performing, and efficient. However, it could not easily accommodate the pursuit of a traditionally important central bank objective: financial stability. Indeed, since central banks have, in essence, just one tool, that is, the interest rate, the pursuit of a financial stability objective in addition to a price stability objective could create dilemma situations. In the two decades between the mid-1980s and the mid-2000s, the economies of advanced economies were very stable, and this period was thus identified as Great Moderation. However, subsequent experience showed that, in this period, the crisis was incubating.

Risks are high despite Turkey’s policy 'normalisation'

2020 ◽  
Keyword(s):  
Monetary Policy ◽  
Central Bank ◽  
Risk Premium ◽  
Financial Stability ◽  
Foreign Debt ◽  
Content Type ◽  
The Public ◽  
High Inflation ◽  
The Government

Significance With the lira at a record low, the Central Bank continued to tighten monetary policy this week, funding the market through competitive one-month repo tenders at rates of around 12.5%. In recent weeks, the government and Central Bank have taken a series of steps to modify the expansionary and in some cases unorthodox policies adopted during the COVID-19 pandemic. Impacts Foreign portfolio investors could shun the Turkish market for some more months, and the risk premium will remain high. Although this year’s annual contraction in GDP, at 3-4%, may be less severe than expected, the recovery may decelerate or be interrupted. The lira may fall further with concerns about foreign debt, forex reserves, budgets, inflation and financial stability persisting into 2021. Given the weak lira, the jobs crisis and high inflation, the government will struggle to persuade the public it has managed the crisis well.

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