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Economic Policy and Financial Regulation (Key Terms (Inflation (General…
Economic Policy and Financial Regulation
Goverment key economic objectives
Macroeconomic Objectives
Price Stability
Low unemployment
Balance of payments equilibruim
Satisfactory economic growth
Key Terms
Inflation
General rise in prices
Disinflation
Inflation - Rising, less quickly
Deflation
Negative inflation rate
Recession
Two quarters negative GDP growth
Gross Domestic Product (GDP)
Monetary value of goods/services
Consumer Price Index
Measurement basket of consumer goods/service
Monetary Policy
Monetary Policy Committee Sets Bank Rate
Rate Financial Institutions Borrow
Manipulation of raising/lowering interest rates
Inflation Target
2% measure by CPI - 1% divergence
Fiscal Policy
Adjustment of Taxation/Public spending
Increase taxation
less disposable income
less spending
less demand for goods
Inflation falls
Reduction taxation
More disposable income
more spending
more demand for goods
Inflation rises
Budget deficit
Greater public spending
less taxation
Budget surplus
Greater taxation
less public spending
The European Parliament and the Council of Ministers
European Financial Laws
Regulations
General application
Binding in entirety
Directly applicable in all member states
Directive
Binding upon member state addressed
Discretion on how it is achieved
Directive achieved within timescale (two years)
European System of Financial Supervision (ESFS)
European Central
Bank Council
Chairs of EBA, EIOPA
and ESMA
European Insurance
and Occupational
Pensions Authority
(EIOPA)
National
insurance
supervisors
European Banking Authority (EBA)
National
banking
supervisors
European Securities
and Markets
Authority (ESMA)
National
securities
supervisors
European
Commission
The European Central Bank
The Single Supervisory Mechanism
Supervision/ Monitoring banks in EU states
Regulatory Oversight
UK five tiers of regulatory oversight
1st European Legislation
2nd Acts of Parliament
3rd Regulatory bodies
4th Policies/practices of financial institution
5th Arbitration schemes