Comparison of Us and Uk Banking Systems Essay

836 Words Oct 26th, 2012 4 Pages
The Bank of England has had much success and as a result many nations have followed its lead in creating a central banking systems of their own. The United States is one of these nations. The two nations have many similar banking objective and strategies on how to best achieve the objectives. These nations also differ greatly in some aspects of their banking philosophies. The currencies of both nations are strongly held around the world. Their monetary policies and bank regulations differ in some aspects, but both nations banking systems are held to high esteem worldwide. The banking systems of the United States and the United Kingdom were born of the same origins but differ in some major aspects of practice.

The United States monetary
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The Federal Reserve and The Bank of England aim to maintain confidence in the domestic financial markets and stability in the foreign exchange markets. To achieve this price stability, they are focusing on a monetary policy that targets the value, supply and cost of money in the economy. Both The Bank of England and The U.S. Federal Reserve use the interest rate to influence the economy and control price stability. The interest rate policy is formed through evaluation of many factors such as demand, output, employment, money and credit growth, asset prices and the exchange rate.

The Central Banks of the United States and United Kingdom take measures to prevent the collapse of their banking system. The Federal Reserve and The Bank of England protect themselves by functioning as a lender. They step in as a last resort option to prevent a financial institution from failing if the failure is expected to hurt the overall economy. Both systems also have a requirement for all commercial banks to ensure that the commercial banks will be capable of meeting their liabilities.

Along with protecting themselves the Central Banks also have interest in protecting, as well as maintaining confidence of their consumers. To gain confidence and insure their customers the United States and United Kingdom banking Systems are monitored and maintained by the American Federal Deposit Insurance Corporation and the United Kingdom's Deposit Protection Fund. These

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