The financial sector

a marketplace where buyers and sellers participate in the trade of assets such as equities, bonds, currencies and derivatives

capital, foreign exchange, derivatives, money

markets that allow individuals and institutions to trade finacial securities and gain long-term finance

stock markets, bond markets

markets to buy and sell shares in limited companies

markets for loans to companies or governments

markets for short-term loans such as treasury bills and certificates of deposit

markets to trade financial instruments

markets to trade currencies

to facilitate saving, to lend to businesses and individuals, to facilitate the exchange of goods and services, to provide forwards markets in commodities and contracts, to provide a market for equities

financial institutions enable households and businesses to save money by providing a rage of accounts with varying degrees of risk and rates of interest

financial institutions enable the connection between households and businesses which have saving with those that need to borrow

financial institutions enable people to make pyaments in shops or online, receive wages or welfare payments from the government and other incomes and settle debts

finacnial institutions enable forward markets to set a price of an asset

hedging, speculation

investment to reduce the risk of adverse price movements in an asset

financial institutions enable stock markets to give companies access to capital and investors a share of ownership in a company

asymmetric information, moral hazard, speculation and market bubbles, externalities, market rigging

when one party incolved in a financial contract has less information that the other party

health insurance, risks of derivatives, stock market

when an individual or institution has an incentive to increase its exposure to risk because it does not bear the full costs of that risk

when assets are traded at considerably higher prices than their intrinsic value

costs and benefits to third parties who are not directly involved in a transaction

a form of collusion in which parties illegaly fix prices to achieve higher profits at the expense of consumers or other parties

implementation of monetary policy, banker to the government, banker to the banks - lender of last resort, regulation of the banking industry

targets inflation using interest rate policy and quantitative easing

manages the government’s accounts and arranges loans to the government

helps to maintain stability in the banking and financial system

Prudential Regulation Authority (PRA), Financial Conduct Authority (FCA), Financial Policy Committee (FPC)

ensures the stability of firms involves in financial services such as banks, builiding societies, credit unions and insurers

protects customers, promotes competition and maintains stability in the financial services sector

identifies risks and weaknesses accross the UK financial system