7951325
| Question | Answer |
| Money | Primarily a medium of exchange or means of payment; but also a store of value. |
| Narrow money | The part of the money supply made of cash and liquid bank and building society deposits. |
| Broad money | The part of the money supply made of cash, other liquid assets, but also less liquid assets. Bank of England measures this, called M4. |
| Liquidity | Measures the ease with which an asset can be converted into cash without the loss of value. |
| Equity | Wealth; shares are known as equities. May also mean fairness or justness. |
| Debt | Money people owe. |
| Bonds | Financial securities sold by companies or by governments which are a form of long-term borrowing. Bonds usually have a maturity date on which they are redeemed, with the borrower usually making a fixed interest payment each year until the bond matures. |
| Financial markets | Markets in which financial assets or securities are traded. |
| Money markets | Provide a means for lenders and borrowers to satisfy their short-term financial needs. Assets bought and sold here are short-term and easily convertible to cash. Umbrella term covering several markets, such as treasury bills and commercial bills. |
| Capital markets | Where securities such as shares and bonds are issued to raise medium-long term financing, and where shares and bonds are then traded on the second hand aspect of the market, such as the London Stock Exchange. |
| Foreign exchange markets | Global, decentralised markets for the trading of currencies. The main participants are large international commercial banks. Collectively, these markets are the largest in the global economy. |
| Shares | Undated financial assets, sold initially by a company to raise financial capital. Shares sold by PLCs are marketable on a stock exchange, but those from Ltd's are not. Unlike a loan, a share signifies that the holder owns part of the enterprise. |
| Corporate bonds | Debt security issued by a company and sold as new issues to people who lend long-term to the company. They can usually be resold second-hand on a stock exchange. |
| Government bonds | Debt security, in the UK known as gilt-edged securities or gilts, issued by a government and sold as new issues to people who lend long-term to the government. They can be resold second-hand on a stock exchange. |
| Coupon | The guaranteed fixed annual interest payment paid by the issuer of a bond to the owner of the bond. |
| Maturity date | The date on which the issuer of a dated security pays the face value of the security to the security's owner. |
| Central bank | A national bank that provides financial and banking services for its country's government and banking system, as well as implementing the government's monetary policy and issuing currency. |
| Commercial bank | A financial institution which aims to make profits by selling banking services to its customers. AKA a retail or high street bank. |
| Investment bank | A bank which does not generally accept deposits from ordinary members of the general public. Traditional investment banking refers to financial advisory work, such as advising on flotations. They also deal in financial markets for their own account. |
| Systemic risk | In a financial context, this refers to the risk of a breakdown of the entire financial system, caused by inter-linkages within the financial system, rather than simply the failure of an individual bank or institution. |
| Credit | When a bank makes a loan it creates credit. The loan results in the creation of an advance, which is an asset on the balance sheet, and a deposit, which is a liability of the bank. |
| Profitability | The state or condition of yielding a financial profit or gain. |
| Security | Secured loans, such as mortgage loans secured against the value of property, are less risky for banks than unsecured loans. |
| Bank Rate | The interest rate set by the Bank of England which it uses as a benchmark for setting the interest rates that it charges when lending to commercial banks and other financial institutions. |
| Quantitative Easing / Asset Purchase Scheme | An unconventional form of monetary policy through which a central bank creates new money electronically which it then uses to buy financial assets, such as government bonds, on the country's financial markets. |
| Forward guidance | Attempts to send signals to financial markets, businesses and individuals, about the Bank of England's interest rate policy in the months and years ahead, so that economic agents are not surprised by a sudden and unexpected change in policy. |
| Funding for Lending Scheme | Incentivises banks and building societies to boost their lending to the UK real economy. FLS is skewed towards small and medium-sized enterprises (SMEs). |
| Financial Policy Committee | The part of the BoE charged with the primary objective of identifying, monitoring and taking action to remove or reduce systemic risks with a view to protecting and enhancing the resilience of the UK financial system. Secondary objective to support government policy. |
| Prudential Regulation Authority | The part of the BoE responsible for the micro-prudential regulation and supervision of banks, building societies, credit unions, insurers and major investment firms. |
| Financial Conduct Authority | Primarily responsible for macro-prudential regulation, the FCA aims to make sure financial markets work well so that consumers get a fair deal, by ensuring the industry is run with integrity and that consumers can trust firms to provide the appropriate services and products. |
| Liquidity ratio | The ratio of a bank's cash and other liquid assets to its deposits. |
| Capital ratio | The amount of capital on a bank's balance sheet as a proportion of its loans. |
Want to create your own Flashcards for free with GoConqr? Learn more.