The Financial System

Abstract

The title of this textbook makes it necessary to define the term “financial services” for purposes of exposition and subsequent analysis. It is virtually impossible to describe the extant financial services system as it exists in every distinct region of the globe. The infrastructure holding together the individual pieces that allow cross-border delivery of services was developed by historical accident without a pre-conceived master plan. To resolve these impediments to providing a meaningful narrative of financial services, this chapter focuses upon the UK financial system. It is large in relation to the economy, is an important financial centre for global transactions in financial assets, and has already been mapped by the Bank of England. The UK financial system is a microcosm through which financial services generally may be defined and analysed. Brexit, and the purported loss of London as a global financial centre, are irrelevant for purposes of illustration, since the UK is rich in financial institutions. This chapter is descriptive leaving for later critical analysis of underlying and misleading assumptions.