Financial Sector: An Introduction,授课教师： 黄勇 博士,Introduction,1. 本课程的Outcomes: Financial Institutions Capital Markets Money Markets,2. 本课程的Assessment Information: One formative Assessment A case study Six restricted response questions should be completed in not more than two hours. will be permitted to bring notes,Section 1,1. Economic agents (finance): Surplus units Deficit units A bank: financial intermediary to achieve a double coincidence of wants,Financial institution acting as principal, not as a agent example of a unit trust Relationship of a contract nature,2. Two kinds of financial intermediary: Direct lending: coping with the problem of liquidity Secondary market Deposit-taker,Indirect lending: not offering the liquidity, e.g. pension funds solve the problem of matching surplus and deficit units,Matching problems (P. 25): Maturity Amount Risk Location,3. Function of financial intermediary maturity transformation aggregation of small deposits risk transformation,Section 2 Importance of money,1. The concept of money Cash: bank notes, coins advantage of cash a quick and convenient method disadvantage of cash(P.36) Cheque handling cost,Credit card: MasterCard, VISA debit card: Maestro, Delta Quasi-cash: tokens, vouchers, coupons,Bank giro credit: for a one-off payment Standing order: for fixed regular payments typically used to pay rent, mortgage, etc. Direct debit: for varying amount payments used to make recurring payments for credit card or utility bills,Postal order/money order: is a payment order for a pre-specified amount of money Store cards are subject to interest charges,2. History of money Definition of money (P.39) shells: Polynesian salt: Romans tobacco: prisoners Definition of legal tender (P.42),3. Barter: a society without cash examples of barter today difficulties of barter,4. Qualities of money general acceptability durability divisibility portability scarcity recognisability homogeneity,5. Functions of money medium of exchange a unit of account a store of value a standard of deferred payment a means of unilateral transactions a means of influencing economic activity,6. Other definitions of money convertible and inconvertible money primary and secondary money quasi-money govt. definitions of money,Section 3: The Bank of England,3.1 brief history goldsmith bankers receipts/promissory notes loaned funds to govt. establishment in 1694, William Paterson a loan of 1,200,000 to govt. at a rate of 8% joint-stock bank - PLC the status of govt.s banker and debt manager,3.2 the nature of BOE a joint stock company limited liability banker to other banks the Bank Charter Act 1844 1998 Act,3.3 purposes of BOE maintaining the integrity and value of the currency related activities price stability and monetary policy Monetary Policy Committee: MPC,maintaining the stability of the financial system domestically and internationally relationship between BOE and FSA FSC LOLR seeking to ensure the effectiveness of UKs financial services,3.4 governance of BOE The Court (governing body) NedCo MPC Audit committee Governors Committee Management Committee,Organization of the BOE monetary analysis and statistics：Monetary and Financial Statistics Division financial market operations financial stability coordination unit to Europe,3.5 functions of BOE banker to government Exchequer Account temporary finance monetary policy fiscal policy,banker to the banks high street banks/clearing banks/building societies cash reserves operational balances non-operational balances special deposits,note issue fiduciary money management of national debt disadvantages of too large gilts DMO Treasury bills and gilt-edged securities,PSNCR meets the deficit three resources operating office: DMO, CGO monetary policy implementation LOLR international relations,managing the EEA to stabilize the value of sterling private banking: customers accounts opened before 1946, and staff members accounts open mkt operations to meet interest rate decision supervision of the financial system Financial Services and Market Act 2000 payment and settlement systems,3.6 Balance Sheet liabilities of the issue department assets of the issue department note issue liabilities of banking department,Section 4 UK High Street Banks,4.1 primary and secondary banks retail bank and wholesale bank primary bank: take part in UK payments mechanism clearing banks secondary banks other accepting institutions other financial institutions,English banks in 17th century, a large number of small private banks in 20th century, several major banks Scottish banks relations with Italian merchants and moneylenders more trading with European nations than English merchants, the Bank of Scotland the Royal Bank of Scotland 1845 Banknote Act (Scotland) the savings bank movement during 18th century, minimum deposit of an account was 10, out of reach of poorer the first savings bank by Henry Duncan post office savings system in UK,