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Essay / Research Paper Abstract
This 3 page paper answers three questions concerning national financial systems, the first part considers what elements are required for an effective financial system to be in place. The second part defines contractual savings, looks at what they are and sources of funding for contract savings organizations, the last part of the paper defines M1, M2 and M3 money measures. The bibliography cites 4 sources.
Page Count:
3 pages (~225 words per page)
File: TS14_TEfinsysm.rtf
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Unformatted sample text from the term paper:
not a necessity, in the UK the Bank of England only became independent in 1997, and there was an effective financial system in place prior to this (Wolf, 1997).
The most important elements needed is an effective regulatory system, so that that there are sufficient controls to allow for confidence and control within the system. The current credit crunch
may be argued as occurring due to the behavior of banks and financial institution and the way they were regulated with sufficient latitude for poor practices to take place.
Likewise the Asian currency crisis can has been attributed to regulatory issues (Woodall, 1998). The rhetoric regarding the reason for the crisis are diverse with claims of over regulations and
restrictions causes the collapse as well as claim that it was under regulations in a developing liberalized economy (Woodall, 1998). There are probably elements of truth in both of these
arguments as different countries had different levels of regulation and the economies were interdependent. Therefore there needs to be regulation to protect and safeguard the system, to control and limit
action but not to stifle and prevent actions needed. While it is difficult to get the perfect balance, a robust system would help to create and support an effective financial
system In order to be effective there is also the need for a sound monetary and fiscal policy to control money how it is printed, raised, spent and invested by
government. For example, a government deciding to print more money to pay of debt will create instability as the value of the currency will fall if there is a high
increase in the money supply. Likewise an economy may be destabilized if there is no confidence in the government to run it. Question 2 Contractual savings organizations are
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