But it is corrosive. Walter Bagehot, editor of this newspaper between 1860 and 1877, argued that financial panics occur when the “blind capital” of the public floods into unwise speculative investments. Yet well-intentioned reforms have made this problem worse. The sight of Britons stuffing Icelandic banks with sterling, safe in the knowledge that £35,000 of deposits were insured by the state, would have made Bagehot nervous. The fact that professional investors can lean on the state would have made him angry.
These five crises reveal where the titans of modern finance—the New York Stock Exchange, the Federal Reserve, Britain’s giant banks—come from. But they also highlight the way in which successive reforms have tended to insulate investors from risk, and thus offer lessons to regulators in the current post-crisis era.
This deals with what financial management must know of personnel policies as they relate to resource management, manpower rules, regulation, laws and development of manpower requirements. This section does not teach individual Service methods and policies for manpower administration, but rather overall DoD policy.
This makes the second trend more troubling. The response to a crisis follows a familiar pattern. It starts with blame. New parts of the financial system are vilified: a new type of bank, investor or asset is identified as the culprit and is then banned or regulated out of existence. It ends by entrenching public backing for private markets: other parts of finance deemed essential are given more state support. It is an approach that seems sensible and reassuring.
Yet finance can also terrorise. When bubbles burst and markets crash, plans paved years into the future can be destroyed. As the impact of the crisis of 2008 subsides, leaving its legacy of unemployment and debt, it is worth asking if the right things are being done to support what is good about finance, and to remove what is poisonous.
In May 1997, the British Chancellor of the Exchequer made the decision to move the responsibility of supervision of financial institutions into the hands of a new regulatory authority, the Financial Services Authority (FSA).
Overall responsibility for regulation of financial markets lies with HM Treasury and is then divided up between the Bank of England and the FSA.
The FSA has five primary functions: Authorisation of market participants; Prudential supervision of banks, insurance companies, securities firms and fund managers, and regulation of their conduct of business; Investigation, enforcement and discipline; Regulation of investment exchanges and clearing houses; Regulation of collective investment schemes.
As the statement argued, ‘Disclosure outside the financial statements is only used to manage the impressions of gullible shareholders.’ which generally means that such disclosures mislead the shareholders through manipulating their perceptions....
The regulation of the financial system in the UK however is not as explicit as the system in the US where the Securities and Exchange Commission holds some of the most extensive regulations, which are viewed by some as being excessive.
So the UK’s new system is a compromise between the best of self regulation and statutory regulation to ensure the financial markets work in an efficient and orderly manner.
The challenges now come from the increasing need for harmonisation of regulations in the EU and also the need to react to the effect that technology can have on financial markets, something that many current financial regulatory systems have yet to tackle.
As a result, the International Financial Reporting Standards (IFRS) were developed by the International Accounting Standards Board (IASB) to unify the various financial reporting methods and create a single accounting standard which can be applied to any financial statement worldwide (Byatt).
l Financial Reporting Regulations in UK Regulators that establish requirements for the reporting of financial results have recently issued several new initiatives targeted at the practices of many firms....
A global financial crisis ensued the same year, which would obviously have a negative impact on Ireland - it “contributed very significantly to the [Irish] economy’s current woes” (Fitzgerald, 2011)....