London financial market has growth one of important position in the global financial market. This benefit caused by perfect financial system and effective financial regulation before. Especially, there is the financial power house generate huge economic activity in London. It benefit of financial sector can generate huge positive impact in different aspects, such as Huge taxes to the government, huge percentage of GDP, attractive enormous FDI and Massive employment work in this sector. However, the financial sector could lead to different cost that the UK authorities will help the banking system to keep health, when occurs a collapse in financial sector. For this reason, this will generate huge cost and affect economic in UK. Moreover, the financial sector still remained an area of tension between UK and EU members since UK joint the EU. The main characteristic of UK banking system is that the UK are not willing to joint the Euro zone due to losing control of the determinant in economic. As a result, UK is one of country less influence in European debt crisis. First, this paper attempts to analysis the how to keep the stability financial sector to economy in the UK. Second, this essay is going to evaluate the main cost and benefic of the financial sector in the UK. Third, the essay will evaluate the current regulation in financial sector between UK and EU.
There is hot topic about how to keep the financial stability in the world. The financial stability will be carried out in the comprehensive way involving administrative, legal and economic means. Schinasi (2006) indicated that stability required the central bank, financial department and financial regulators to take different policies to influence the financial institution, financial market and economic operation. This shows that only central bank and government fiscal power cannot be able to achieve the goal of financial stability effectively. Therefore, the financial sector should build the stability mechanism in central bank and financial regulatory. Moreover, According to the Singh (2012), the British has isolate the bank regulatory function of the bank of England and established the independence of the comprehensive financial regulators which called the financial services authority (FSA). This main function of FSA is responsible for the British financial regulation in order to give the Bank of England, the financial service authority and ministry of finance in the maintenance of financial stability. Finally, stability financial system can effectively reduce the negative impact from the financial crisis. Caprio (2012) has been argued that stability financial system is able to provide the engine oil for the economic growth. This shows that financial sector is vital resource to national economy growth in order to keep long-term development.
Even through the international financial service is more competitive than before, but the UK still is one of vital financial central in the world. First, It is essential that the importance of financial service supports the economic growth and help to establish the competitive in the global financial market. Giudice et al (2012) states that The UK financial sector was approximately 8% of gross domestic product (GDP) in 2007, while the USA only was 7.5%. this shows that the financial service plays an important role in the whole economy growth in Britain. Therefore, the financial sector is definitively to make huge contribution to modern economy. Second, the UK financial sector is likely to make contribution to net exports. Giudice et al (2012) explained that the two-thirds of the financial service sector was surplus with net exports of £33 billion in 2009. This shows that the UK financial sector does not much affected by Global economy recession after 2008. In this financial crisis, most of countries was more sharply impacted by the crisis, such as USA, EU. However, Sheppard (2013) argued that the UK financial services...
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