Investment and risk

In many western economies including the UK, Government economic policy now concentrates on inflationary control. Fiscal policy has become less significant as the primary method of controlling economies as the influence of capital markets becomes increasingly more powerful. If traders wish to support a national economy, then vast sums can be brought into a country via the markets. Equally, if they disapprove of a regime, then funds can be quickly moved away. There is still a...

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...illennium, large surpluses were recorded. However, in recent years the Government’s borrowing requirement has increased significantly. The chancellor relies presently on a policy of increased operational efficiency in the UK public services sector as well as hoped for increased tax revenue alongside economic expansion. Of course, whilst the economy expands it will result in reduced costs of unemployment as well as the higher tax revenue from more work being available.

Central banks have four main responsibilities:

Setting Interest Rates

This is achieved through purchase and sale of bonds and treasury bills in the money markets. Rates are raised by selling securities, thus taking money out of circu...

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...sk weighted assets to be held by banks. This requirement has been refined and new capital requirements (following Basle 2) are in place.

In 1998, UK banking supervision passed from the Bank of England to the Financial Services Authority.