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UK’s financial stability governance framework: trade-off, reform, and implications

ZHENG Liansheng1

(1. Institute of Financing and Banking of Chinese Academy of Social Sciences)

【Abstract】The governance framework for financial stability, including policy objectives, mandates, tools, coordination, and crisis management, is to realize stability of financial systems. It presents four governance models, namely, single authority, two-pillar framework, Singapore model, and responsibility-sharing system. In the wake of the global financial crisis, the UK government comprehensively reassessed its financial stability policy and governance framework to cope with the inherent challenge of financial stability and improve governance arrangements for financial stability; and based on that, it has carried out major reforms of its financial stability policy and related governance framework. In the past 10 years, the UK has become one of the few economies that have conducted profound reforms in financial stability governance regime, which features the Bank of England as the core player, the integration of the three pillars of monetary policy, macroprudential management and micro-regulation, and three professional committees to make independent decisions to highlight the leading functions of macroprudential management policies. The experiences of the UK serve as insightful policy references for China, which is carrying out its financial regulatory reform.

【Keywords】 financial stability; governance framework; the UK; three pillars;

【DOI】

【Funds】 The National Social Science Fund of China (14CJL017) The National Social Science Fund of China (13AJY018)

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This Article

ISSN:1007-0974

CN: 11-3799/F

Vol , No. 02, Pages 142-159+8

March 2019

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Article Outline

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Abstract

  • 1 Governance framework for financial stability: content and practice
  • 2 Governance framework for financial stability in the UK: trade-off and integration
  • 3 Governance framework for financial stability in the UK: practice of policies
  • 4 Conclusions and implications
  • Footnote