Official Preoccupation with the Banking System
In the 1970s and early 1980s, control of the banking system has become a major preoccupation of governments and control authorities in the United Kingdom, the other members of the European Community and generally throughout the world. This preoccupation has focused on two quite separate types of control, prompted by two distinct groups of factors: prudential control, designed to ensure that banks are prudently run, with the aim of protecting depositors and avoiding major upheavals in confidence and the movements of funds; and monetary control, designed to use the banking mechanism as a positive tool in the conduct of macroeconomic policy generally or, at the very least, to prevent the banking mechanism from pulling in the opposite direction from, and thwarting, other measures of economic policy.
KeywordsMonetary Policy Central Bank Foreign Exchange Banking System Money Supply
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- 1.The crisis, its antecedents and the response of the Bank of England and the banking community generally are described in a paper entitled ‘The secondary banking crisis and the Bank of England’s support operations’ prepared by the Bank of England for the Wilson Committee and published in the Bank of England Quarterly Bulletin, vol. 18, no. 2 (June 1978). For a more detailed and colourful description see Margaret Reid, The Secondary Banking Crisis 1973–75 (Macmillan, 1982).Google Scholar
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