preview

The 2008 Financial Crisis

Better Essays
Introduction
The current financial crisis happened on 2008 and lasted for quite a while. It caused different levels of economic recessions in varying regions all over the world. Government officials of financial institutions and economists try to rectify the financial mistakes and lower the risk of future financial crisis. This essay will take United Kingdom financial system for instance, analysis its financial regulations. Firstly, it gives the background of the financial crisis. Secondly, it comes to the failure of old regulation which takes place in the 2007-2008crisis after analysis the examples from UK and International market. Then it discusses the importance of the regulation in this sector and describes the new approach in the UK system. Finally, it summaries the key point of this essay and gives the conclusion.
Background of financial crisis
In 2008, a severe financial crisis arose in American. By the high level of interconnection between each economy, this financial crisis caused several financial problems in different countries at the same time. Gary Yates (2009) pointed that the UK is having a worse economic growth caused by a snowball effect of banking crisis. Facing this situation, economists have summarised the fundamental factors of this financial crisis which includes: different development levels of each country around the world; underestimation and incorrect analysis of financial risk; liquidity risk and unwillingness of lending were faced by banks after lots of investments went bad; too much debt were created and `shadow banking ‘system were set up unregulated.
The failure of UK’s financial regulation system
The reasons of the failures
Although the UK financial system is extremely good in terms of economic ...

... middle of paper ...

...again is essential for the UK to avoid a crisis.
Establish Prudential Regulation Authority (Prudential Regulation Authority, PRA): the Government is working on the Financial Services Authority (FSA) in the current reorganization of the Prudential Regulation Authority, the agency for the subsidiary bodies of the Bank of England, its primary responsibility for the prudential supervision of the micro-level , will be focused on the savings bank, insurance companies and investment banks. Meanwhile, the macro-level for the banking prudential supervision duties will return to the central bank.
The establishment of the Financial Administration (Financial Conduct Authority, FCA): consumer rights protection responsibilities of the origin of the FSA and financial affairs of the company supervisory duties will be transferred by the newly established Monetary Authority to bear.
Get Access