A Severe Test for London as World Financial Centre
The secondary banking crisis of the early 1970s highlighted the fact that it is difficult to move away from an oligopolistic structure characterized by cartel agreements and self-regulation towards a liberalized and more competition-driven system without closer supervision by the regulatory authorities. Standards of risk management, control and care within individual
credit institutions were not good enough to face the impending crisis in a tightened monetary policy environment, and supervision failed to detect these shortcomings. Competition and innovation may foster efficiency, but in the short run they may cause crises by exposing the inefficiencies that protection had previously concealed. After the secondary banking crisis, and before the most recent turmoil, four important crises occurred, and other pieces of legislation were adopted in reaction to them. The most important was the Financial Services and Markets Act of 2000, which will be considered in greater detail.
KeywordsMonetary Policy Central Bank Financial Service Pension Fund Small Bank
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