LIBF-Unit 4

competition and markets authority - Answer- The body responsible for strengthening business competition and preventing and reducing anti-competitive activities. counterparties - Answer- People and organisations (eg companies) who lend money to and borrow from financial intermediaries (ie financial institutions such as banks) divestment - Answer- The process of selling off parts of a company to make it smaller, eg the Lloyds sell-off that created new TSB branches. financial intermediary - Answer- A financial institution that facilitates the process of lending and borrowing, by taking deposits from those with a surplus and lending those funds out to those who need to borrow. financial intermediation - Answer- The process of taking in deposits from those with a surplus and lending those funds out to those who need to borrow (see financial intermediary). financial policy committee - Answer- A part of the Bank of England that monitors and responds to risk posed to the entire financial services market. Its focus on the whole market makes it a macro-prudential authority. friendly society - Answer- A mutual organisation that offers its members a wide range of financial products, which can include savings, investments, insurance, pensions and annuities. hm treasury - Answer- Her Majesty's (HM) Treasury, the government department responsible for development and implementation of financial and economic policy. investment banks - Answer- Banks that raise funds on the financial markets, rather than accepting deposits as a retail bank does. They use these funds to provide special services to large corporations and to governments. Also known as wholesale banks. lloyd's insurance market - Answer- An insurance marketplace where members (corporations and individuals) employ underwriters to come together and accept insurance risk, dividing it out between the members. long-term capital markets - Answer- Financial markets where long-term debt (ie bonds) and shares in the bank (equity) are bought and sold. This provides a source of funding for banks. monetary policy - Answer- The manipulation of interest rates to maintain low inflation.