Financial system: Difference between revisions
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==Trends and innovations== | ==Trends and innovations== | ||
<!--Outline: (a)before the 1980s,(b) deregulation, (c) innovation, (d) globalisation--> | <!--Outline: (a)before the 1980s,(b) deregulation, (c) innovation, (d) asset market booms and busts (http://www.bis.org/publ/work193.pdf?noframes=1) (e) globalisation--> | ||
From the early years of modern commercial history, the banks have been the core element of the financial system, and their relationship with their national governments have had a significant influence on its development. In the nineteenth and early twentieth centuries, it was essentially an arms-length relationship, but the price that the United States banking system paid in 1933 for its rescue from threatened extinction was a measure of regulation. | |||
<!--To limit that danger, they have traditionally required banks to limit the extent to which their loans exceed the funds provided by their shareholders by the imposition of minimum "''reserve ratios''" and have placed various other restrictions upon their activities. In the 1980s, however, it was widely considered that those regulations were imposing excessive economic penalties, and there was a general move toward "deregulation" <ref>[http://www.bis.org/publ/econ43.pdf?noframes=1 Claudio Borio and Renato Filosa: ''The Changing Borders of Banking'', BIS Economic Paper No 43, Bank for International Settlements December 1994]</ref>. Restrictions that had prevented investment banks from broadening their activities to include branch banking, insurance or mortgage lending were dropped, and reserve requirements were relaxed or removed.--> | <!--To limit that danger, they have traditionally required banks to limit the extent to which their loans exceed the funds provided by their shareholders by the imposition of minimum "''reserve ratios''" and have placed various other restrictions upon their activities. In the 1980s, however, it was widely considered that those regulations were imposing excessive economic penalties, and there was a general move toward "deregulation" <ref>[http://www.bis.org/publ/econ43.pdf?noframes=1 Claudio Borio and Renato Filosa: ''The Changing Borders of Banking'', BIS Economic Paper No 43, Bank for International Settlements December 1994]</ref>. Restrictions that had prevented investment banks from broadening their activities to include branch banking, insurance or mortgage lending were dropped, and reserve requirements were relaxed or removed.--> | ||
Revision as of 16:20, 8 June 2009
Trends and innovations
From the early years of modern commercial history, the banks have been the core element of the financial system, and their relationship with their national governments have had a significant influence on its development. In the nineteenth and early twentieth centuries, it was essentially an arms-length relationship, but the price that the United States banking system paid in 1933 for its rescue from threatened extinction was a measure of regulation.
- ↑ Thomas Philippon and Ariell Reshef: Wages and Human Capital in the U.S. Financial Industry: 1909-2006, National Bureau of Economic Research, December 2008
- ↑ Financial Services Modernization Act, Summary of Provisions, US Senate Committee on Banking, Housing and Urban Affairs November 1999
- ↑ Cludio Borio and Renato Filosa: The Changing Borders of Banking, Bank for International Settlements, 1994
- ↑ The Long Demise of the Glass-Steagall Act, PBS, 8 May 2003
- ↑ Garn-St. Germain Depository Institutions Act, Answers.com
- ↑ Max Corden: Exchange Rate Policies and the Global Imbalances, Paper for James Meade Centenary Conference, Bank of England, July 2007