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The economic crisis and the city of London - Essay Example

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This paper talks about the impact of the world financial crisis on the state of the banking segment of the UK economy. The current role of banks in the economy is considered, as well as their principles of organization. The crisis has greatly influenced UK banking sector, because of its global role…
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The economic crisis and the city of London
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Download file to see previous pages n just the financial market but it is also a hub of extraordinary financial innovation as well as the ability to evolve new ways of life in which society actually flourishes. The current financial crisis therefore has also hit hard the city of London- the first major financial hub of the world. City has remained an active participant in the overall financialization of the British economy and played major part as a market to fill the gap between demand and supply of funds. (Klimecki, 2011). This rise to the fame however, took place gradually due to de-regulation of banking sector which many interest groups are now demanding to be regulated again. The current crisis therefore is not only resulting into loss of jobs but the overall prestige of world’s first financial hub. Banks as important segment of the economy Banks play important role in economy because they serve as the intermediary between savers and consumers. By playing the role of intermediaries, banks actually serve as a link between those who want to save and those who want to borrow. This role therefore has allowed banks to become one of the most important segments of any economy. It is critical to understand that the existence of banks often serve the economic purposes of channeling the savings of those who want to save to those who want to borrow. By doing so, banks actually help other sectors of the economy to access a large pool of funds which can be used for the expansion purpose. Banks therefore serve not only as the creators of money within an economy but also provide essential economic support to other sectors of the economy. (Rubinstein, 1993)  The history of banking in UK is more than 400 years old when first banks started to operate during 17th century. Over the period of time, the sector grew...
This paper presents the comprehensive analysis of post-crisis role of the banking system in the UK economy. The essay also outlines the political connections of the London city’s financial district with the ruling Conservative party.
What started as a simple subprime mortgage crisis slowly engulfed the whole economy and created the contagion effect on other sectors of economy also. The inter-linked nature of modern economy has created a chain reaction of events in which bad performance in one segment of the economy also affected other segments.
The presence of almost all international financial institutions as well as other major financial institution. has given a unique significance to London as a major global financial hub.
Banks play important role in economy because they serve as the intermediary between savers and consumers. By playing the role of intermediaries, banks actually serve as a link between those who want to save and those who want to borrow.
The traditional organization of banks is based upon their links with the central banks and other regulatory organizations. In a highly de-regulated environment, banks therefore tend to focus on organizing themselves in a manner which can give them an opportunity to develop significant influence over the policy making issues.
The current Conservative Government and Party are considered as one of the biggest beneficiaries of the link between the two as most of its funding comes from the financial institutions and private equity firms.
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