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Essay / Research Paper Abstract
This Bank of England has two core purposes; first main purpose is monetary policy, the second is financial stability. This 29 page paper examines how this central bank maintains financial stability. The paper looks at the historical view and how this was achieved in the past before the bank was responsible for monetary policy and how this is managed today. The paper includes consideration of the role of the bank as lender of last resort, how the bank presides over the payment and settlement systems along with the roles and other responsibilities of the bank. The bibliography cites 14 sources.
Page Count:
29 pages (~225 words per page)
File: TS14_TEfsbankeng.rtf
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Unformatted sample text from the term paper:
over time to meet the needs of the economy it serves. The bank is currently seen as having two core purposes, both of which are interdependent. These core purposes are
determined by Court, these two core purposes were approved in May 2004 (Bank of England, 2004). The first main purpose is monetary policy, the second is financial Stability. Monetary
policy is defined as "stable prices and confidence in the currency. Stable prices are defined by the Governments inflation target, which the Bank seeks to meet through the decisions on
interest rates taken by the Monetary Policy Committee, explaining those decisions transparently and implementing them effectively in the money markets" (Bank of England, 2004). This is the purpose that attracts
the most attention as it is the most visible and sees the most literature published. However the second core purpose is equally as important and is interdependent with the first.
Financial stability is defined by the Bank of England in the following terms; "Financial stability entails detecting and reducing threats to the financial system as a whole. Such threats
are detected through the Banks surveillance and market intelligence functions. They are reduced by strengthening infrastructure, and by financial and other operations, at home and abroad, including, in exceptional circumstances,
by acting as the lender of last resort" (Bank of England, 2004). These are important operational elements and although the make up of how they are achieved has changed
over the years, the financial stability may be seen as the initial purpose behind the creation of the Bank of England as the Central Bank, and a key component of
the idea before the development of a central bank was more focused in the financial stability rather than the monetary policy. 2. The Development of Financial Stability The historical performance
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