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- Title
The financial cycle and the UK economy.
- Abstract
In this speech, Sir John Gieve, Deputy Governor for financial stability, discusses the financial cycle and the UK economy. He argues that the US sub-prime market provided only the initial spark and fed a fire fuelled by much broader weaknesses in the financial sector. He outlines a number of factors in modern credit markets that have tended to amplify the financial cycle, including a growing reliance on credit ratings, a greater proportion of balance sheets coming under mark-to-market accounting, asymmetric remuneration structures that reward risk-taking, and regulatory incentives. He concludes that the Bank is assessing proposals to make the regulatory system more countercyclical and is discussing the best approach with the FSA and international colleagues at the Financial Stability Forum.
- Subjects
UNITED Kingdom; GIEVE, John; BANK of England; BUSINESS cycles; MONEY market; ECONOMIC conditions in Great Britain -- 20th century
- Publication
Bank of England Quarterly Bulletin, 2008, Vol 48, Issue 3, p321
- ISSN
0005-5166
- Publication type
Speech