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Financial Stability and the Role of the F inancial P olicy C ommittee
Author(s) -
Farmer Roger E. A.
Publication year - 2014
Publication title -
the manchester school
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.361
H-Index - 42
eISSN - 1467-9957
pISSN - 1463-6786
DOI - 10.1111/manc.12070
Subject(s) - portfolio , economics , financial stability , asset (computer security) , stock market , financial market , finance , financial economics , financial system , computer science , paleontology , computer security , horse , biology
This paper distinguishes institutional from systemic explanations for the cause of financial instability. I argue that financial crises are systemic, and as a consequence, the maintenance of financial stability requires more than simple regulation of existing institutions. The newly created F inancial P olicy C ommittee of the B ank of E ngland, should actively manage the asset portfolio of the T reasury, with the aim of stabilizing the price to earning ( PE ) ratio of a broad stock market index.