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Regulation of Banks - Essay Example

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Regulation of Banks

Although banking has greater orientation towards profit making similar to any other commerce, it is usually treated as a matter of civic concern. The bankers and other shareholders therefore have to take into reason the decisions that they make throughout the process. In view of all these aspects, the banking business has developed various laws and regulations concerning different aspects that exist within the industry2. Therefore, the intricate parties have the obligation of familiarizing with the regulations through an unblemished understanding of the regulatory objectives. Banking regulation bears origin from the matters raised by the microeconomics concerning the capacity of the bank creditors to monitor the risks that arise from various businesses played3. The regulation offers the stability that appears within the banking system for all the industry players in the instance a bank crisis arises. The policies in the regulation of deposits worldwide have been discussed and analyzed for their importance taking into thought the provided objectives for bank regulation. Policy Objectives Throughout the globe, various objectives concerning bank protocols have been set forth in a bid to support the imperative undertaking to regulate business within the industry. ...
Reduction of systematic threats aims at reducing the danger of distraction occasioning from antagonistic tradeoff circumstances that result into manifold or key bank catastrophes. The bank regulations also provide the security requisite to prevent the banks from being misused. The banks are susceptible to misuse by the criminals for various personal recompenses through the help from the bank officials. The most common criminals that are usually prevented through the regulation are the currency laundry from the drug trade and other unlawful activities. The regulation provided by the industry operators also helps in the maintenance of banking discretion or confidentiality5. Role of Regulation The regulation also playacts a key role of ensuring that the credit collected through banking gets directed into the most relevant domestic sectors. Although, the regulations within the banking entity serve to accomplish common objectives, the regulations vary significantly with reference to different nations. The variations exist in the level at which the restrictions get applied for instance, any person or groups of populace having the urge to conduct activities including the lending of money to the general populace have to acquire a license under the Consumer Credit Act6. Commercial Loans However, in the case of the UK, the introduction of any commercial loans has no provisions for an authorization. In the cases of Germany and France, the provision of any commercial loans has to be regulated compared to other banking undertakings. This means that they regulation of the loaning business stands paramount with reference to other countries. In the two countries, the matter of the banking becomes paramount since ...Show more
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Name Instructor Task Date Regulation of Banks Introduction The banking and banking regulations have played chief roles in the development of different countries and their financial systems1. This implicates that banks have now gained a distinctive and central role in the countries’ fiscal markets through the usage of the deposits in various ways such as lending…
Regulation of Banks
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