UK banking regulation
Chambers, C. (2011) UK banking regulation. In: Kostyuk, A., ed. (2011) Banking Reform. Ukraine Banking Academy. Available from: http://eprints.uwe.ac.uk/14447
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Publisher's URL: http://www.academy.sumy.ua/index.php?lang=en
Banks have been an integral part of the UK’s infrastructure since their first inception by the Lombards’ in 1663 on the banks of the River Thames. The nature and the scope of banks and banking services have grown beyond all recognition since the early days of banking. In the beginning banks were a service for those who traded goods along side the River Thames, in other words the Merchants of London. The banks in these days were called Merchant Banks. Only a small proportion of the UK’s population had anything to do with banks. In fact the banks were said to be only for the Rich, the Merchants and the Royal Family. Today this could not be further from reality. If we look back in history without the banks and their continuous growth, the Industrial Revolution would not have been able to have taken place and modern day inventions such as cars, computers aeroplanes etc would not be here. Finance does make the world go round. Without money society cannot grow and banks cannot grow and offer more facilities if society is not demanding more and needing more wealth. Today around 96% of the UK adult population have bank accounts and use banking facilities daily to carry out every day activities. Without banks modern day life would be impossible to carry out. With every intricate part of society there is always regulation to monitor, control and govern. The financial service sector is no different and there is a plethora of regulations and laws in place for every activity the banks carry out. The purpose of this chapter is not to provide a historical overview of the growth of banks and its respective regulations since 1663 but to comment upon banking regulation during a crisis. Bank crisis’s are not a new phenomenon. Indeed without bank crisis’s, bank development and growth would have been stifled. With each new crisis in history new regulation and practices have been put in place to ensure that the financial sector grows and evolves in order to maintain a controlled but developing economy. However, no crisis’s has ever been seen like the one the world is presently recovering from. The crisis of 2007- to present (and I beg no forgiveness for saying that we are still within the crisis) was unprecedented. The enormous bubble of wealth and growth that had arisen over twenty or so years was catapulted on its way with the help of technology, knowledge (or lack thereof) and regulation. The crisis is a complicated beast to untangle and has many facets and layers of blame. The crisis is further complicated in the UK by the political arena the crisis was to be played out in.