Money And Banking Assignment Solution

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MONEY AND BANKING
Table of ContentsINTRODUCTION...........................................................................................................................1Literature review..........................................................................................................................1Impact of financial crisis 2007-09 on Bank of England..............................................................3CONCLUSION................................................................................................................................5REFERENCES................................................................................................................................6
INTRODUCTIONBanking Sectors is a segment which contributes in development of economy by providingfunds to individual of economy from the funds & assets deposited by its customers. Banksprovides smooth flow of cash in economy. This report includes literature review which explainsrequirement and effectiveness of Basel iii given by BCBS. Further, this report includes 3 journalarticles connected to requirements of Basel iii. Furthermore, this report explain affect of financialcrisis on different type of risk such as interest rate risk, liquidity risk, exchange rate risk, modelrisk and balance-sheet risk Barclay Bank.Literature reviewBasel III is beneficial for banking sector because banking of United Kingdom increaseregulation, supervision and management of risk through additional capital, leverage andliquidity. Banks has need of more capital and after Basel III banks in UK hold high capital forinvestment and increase their revenue. So capital increase and liquidity ratio evaluate availabilityand need of capital.According toIngham, Coutts and Konzelmann (2016) Basel III has three pillars andpillar Ishow that increase capital of banks through increase investment from customers and ithelps in increase profit. For evaluation banks use liquidity ratio for maintain and analyze cash.For banks capital and liquidity very important for promote their safety because many customersdeposit their money and invest their capital with trust and withdraw money as their need so it hasto give money on time. It has to keep liquidity and capital for repay to customers. Capital ofbanks in 2019 is 10.5 % and in 2018 it was available in banks 9.875 % so through this capitalincreasing. Capital ratio increase 4 % to 6%.Pillar IIshows increase supervise because risk are present in bank at wide level like :-Credit risk :- it means that borrower of banks fail repayment of their loan, acceptances, interbank transactions, trade financing and foreign exchange. That means if anyone takes loan frombanks and it does not able to repay due to low income, loss in business. So Basel III reduce riskabout credit from increase their interest rate that manage risk.Banks reduce their risk and management of capital also effectively maintain and banksare able to plan for increase capital. Because supervisor time to time review all transactions,liability and capital that available.According toTurner, (2018)1
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