Introduction and Bank Regulations

In this blog, I intend to research how bank regulation developed in the United Kingdom in recent decade (2004-2013), which is a period for banks experienced enormous finance successes and fails. Besides discussion for specific laws and regulations, I will research the replacement of regulators.

Before I explore those sections, I would like to get flavors about why regulates banks, what the bank regulation is and who the regulars are.

Varied views argued about reasons why regulates banks based on distinct focuses such as nature of banking assets, type of banks (Free banks needn't be regulated.), characteristics of banking industry etc. The inherent instability and systemic risks of banks, seen as key points, would lead to the necessary of bank regulations. So actually, what is bank regulation? It is defined as ‘a form of government regulation which subject banks to certain requirements, restrictions and guidelines’. Others identify it as ‘the formulation and issuance by authorized agencies of specific rules or regulators, under governing law, for the conduct and structure of banking’. Banking industry is regulated and runs business particularly lending activities without discretion, monitoring and examining under laws and principles, namely, Basel II, Basel III and Banking Act 2009. As an important role, bank regulation creates a transparent circumstance among banking activities, monetary institutions and other entities, like regulators—Central Bank and Independent Regulator. In the UK, Bank of England (BoE) did not conduct the regulation after late 1990s and the independent regulator—Financial Systematic Authority (FSA)—have replaced by Financial Conduct Authority (FCA) and Prudential Regulation Authority (PRA) in 2013.