Date: Monday 2, October 2017
Media: The Guardian
What happened?
The Bank of England has sent and order to the financial institutions to find £116bn. A series of measures to avoid taxpayers being forced to bail out the banking sector, like the one that took place a decade ago with the Royal Bank of Scotland ans Lloyds Banking Group. Those £116bn, will come from rejigging their existing borrowings, and emissions from banks, which become bonds, in case they reach the times of crisis.
Whom and where it affects?
It positively affects taxpayers because they will no longer have to pay bank bailouts and also for banks because they will have corrective measures in case of insolvency.
What sort of public or private institutions are involved?
Bank of England.
Financial Institutions of England.
Why is it important for banking and finance?
The importance of banking is paramount for the development of the economy, since its main function is to provide funds to public, private and natural persons who need them to meet payment commitments with suppliers, goods and services. The economy is a component, which is reflected in growth or decrease and which in turn significantly affects the development of banking and specifically related to deposits and credits. The bank is obliged to protect the money of its depositors, this being the main reason why they have to take care of the destination of the resources deposited by their clients. The great challenge of banks, as economic indicators continue to improve, is the channeling of more resources for private sector financing.
In case of a financial crisis, investors will not lose their money because the Bank of England has created a deposit to secure the funds and savings that have taxpayers.
Key words: Bonds, Taxpayers, Bank of England, Bailout.
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