Financial Innovation: A View from the Bank of England
There are many candidates for consideration as financial innovations: medium-term floating rate credits, floating rate instruments, financial futures, securitisation, new hedging instruments and techniques, and so on. There is scope for argument as to which of these developments were, and which were not, truly innovatory. Several of them reflect shifts in the relative roles of the banking system and the capital market in mediating between ultimate lenders and borrowers. Inflation and its uncertainty, and the associated varying uncertainty about nominal interest rates, have played a large part here. Swaps between currencies and maturities can also be seen as a natural development of back-to-back loans and indeed acceptance credits which have been around for many years.
KeywordsInterest Rate Monetary Policy House Price Nominal Interest Rate Mortgage Market
Unable to display preview. Download preview PDF.
- Hemming, J.S. (1989) ‘Three Points on the Yield Curve’ in A.S. Courakis and C.A.E. Goodhart (eds), The Monetary Economics of John Hicks(London: Macmillan).Google Scholar
- Leigh-Pemberton, R. (1986) ‘Financial Change and Broad Money’, Bank of England Quarterly Bulletin, 26, 4, December, pp. 499–507 (Loughborough University Banking Centre Annual Lecture in Finance delivered by the Governor of the Bank of England on 22 October 1986.Google Scholar
- Stiglitz, J.E. and Weiss, A. (1981) ‘Credit Rationing in Markets with Imperfect Information’, American Economic Review, 71, 3, June, pp. 393–410.Google Scholar
- Tobin, J. (1984) ‘On the Efficiency of the Financial System’, Lloyds Bank Review, 153, July, pp. 1–15 (Fred Hirsch Memorial Lecture given in New York on 15 May 1984).Google Scholar