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Home > Education and Museum > Your money and the financial system

Your money and the financial system

The crisis that began in 2007 seriously disrupted the operation of the financial system and tipped the world into a major economic downturn. It exposed serious shortcomings in the tools available to deal with failing banks and the need for safeguards to preserve the safety and soundness of the financial system.

A new Financial Policy Committee was created at the Bank of England to spot threats to the financial system as a whole. And responsibility for the safety and soundness of banks, building societies and insurers passed to the new Prudential Regulation Authority.

This pamphlet explores the problems posed by the financial crisis, the major regulatory reforms that followed, and the new responsibilities of the Bank of England. It covers:
  • The global financial crisis
  • What is the financial system?
  • Capital and liquidity: the building blocks of a safer financial system
  • Why is a bank’s capital important?
  • Why is a bank’s liquidity important?
  • How did the crisis change financial regulation in the UK?
  • The Bank of England’s Financial Policy Committee (FPC)
  • The Prudential Regulation Authority (PRA)
  • What happens if commercial banks run short of money?

A stable financial system means households and businesses can have confidence their money is safe, insure against risk and rely on access to finance when they need it – in good times and in bad.

Fersiwn Cymraeg