Good Essay About Financial System Of The United States And Great Britain
The financial system of the country is the whole sphere of economic relations of all business entities and government bodies involved in economic life, as well as regulating economic relations within national boundaries. Since the market economy, as well as in transition, virtually all economic relations exist in the form of commodity-money, so far almost all of them appear to exist in the form of cash flows. Enormous diversity of species of these streams forms the country's financial system. In the financial system allocates public finances, finance companies and finance people.
Subsystems called major components of complex systems, which in turn usually are complex systems. Subsystems of the financial system may be considered: Treasury system, stock market, finance, stock market, insurance and so on.
The structure of the financial system is a set of elements and the relationships between them. State financial system of the developed capitalist countries includes 4 link (subsystem):
1) state budget is a financial plan of the state for the current year, having the force of law, approved by parliament .;
2) local finance is the local budget, municipal securities, owned by local governments, other financial assets;
3) special extra-budgetary funds (social and economic);
4) The finances of public corporations.
Financial System of the Great Britain
United Kingdom (UK) is a constitutional monarchy and parliamentary democracy.
The Queen is the head of state and the head of the legislature. The highest legislative power is vested in the bicameral parliament - the House of Lords and House of Commons. The main functions of participation belong to the House of Commons.
Executive power is government. The chief executive is the Prime Minister, who heads one of the two major parties that currently have a majority in the House of Commons. Government activities conducted in the name of the Queen (the monarchy itself as an institution called the Crown).
UK financial system includes in its membership the sphere of state and local finances, special extra-budgetary funds, finance organizations. Each sphere includes a number of links, which are defined by the nature of the specific activity of the subjects of financial relations:
finance enterprises (organizations) - business finance and finance of public corporations.
As a unitary state, there are two levels of budgets - the state budget and local budgets. The main point here is the state budget. The share of the state budget in GDP is about 40%.
UK central government budget is divided into two components:
1. The budget of current income and expenditures;
2. The capital budget.
The main income of the current budget is taxes, including many species of direct taxes. Together, direct taxes (including social security payments) form about 60% of the revenue of the current budget. Money is spent in this budget to finance the production industries, social services, spending on defense and public administration.
Capital budget revenues are generated from the proceeds of interest on government loans provided by public corporations and authorities, due to the return of long-term Treasury and of the profit of the Bank of England. Capital budget expenditures include expenditures on public debt management, including the payment of interest on the debt and long-term loans to corporations and public authorities for the implementation of capital investments.
Local budgets are budgets of counties and districts. Income and expenses are not included in the central government budget. Municipalities are required to comply with applicable laws in the country, make their laws, they can only in accordance with national laws.
Local budget revenues are generated through taxes and fees, as well as by grants from the central government. Local budget is the expenditures for education, housing, construction of local roads, the contents of the local authorities.
The most important are the social and research funds. Social funds are formed by a number of sources:
premiums of insured persons;
premiums state-owned enterprises (for the National Insurance Fund);
These funds are spent on the provision of social services to the population. Applied methods of payment:
1. The payment of pensions and allowances;
2. Loans from the budget fund for inter-expenditure;
3. The benefits of "social support" - relocation assistance, picked up the economy in the new place, the payment of transportation costs;
4. Crisis loans - to help citizens in the event of danger to health and life in the event of natural disasters and other emergencies.
Foremost among the social fund holds the National Insurance Fund. It is created by contributions from citizens, state enterprises, state subsidies. The fund goes to pensions, unemployment and sickness.
Among research funds is dominated by the National Foundation for Research Development Corporation - formed by the proceeds from the sale of licenses for the use of inventions. Foundations are independent from the state budget, have its own balance sheet. The state provides perpetual loans and annual subsidies named fund.
Fund expenses are intended to finance capital investments of private companies engaged in the development of scientific problems and implementation of the results achieved in production. Public universities, national and private companies engaged in research and revision to industrial development also get money from the fund.
Finance companies (organizations). In the public sector is dominated by corporations that are run by the government enterprises nationalized industries. Sector-wise, it's energy companies, rail transport and others. Financial ratio presented here, on the one hand, the relationship with the budgets through taxes and state loans, on the other hand, give the earmarked funds from the budget.
Leading positions held by private companies. UK Government policy aims to create a very favorable environment for private enterprise, including privatization of inefficient state-owned enterprises.
Fiscal year in the UK begins April 1 and ends on March 31. Cash execution of the budget is done by the Bank of England. Responsibility for overseeing the implementation of the budget is the treasury with their departments.
There are two main types of state financial support:
1. The block grants;
2. Grants for special purposes.
Financial System of the United States
US financial system is complex and diverse, consists of a set of federal and state governments and other management, financial and administrative departments and institutions, private banks and corporations engaged in both domestic and international financial transactions. Due to the enormous influence on the world economy and world finance the US financial system more than any other national system is part of the global financial system.
The state budget is at the forefront in the overall structure of the US financial system in terms of impact on the state's finances, economic conditions, the nature and direction of the economic policy of the government. He is a powerful indicator in determining the long-term plans of large corporations and banks. This role is obvious by virtue of colossal dimensions of public spending, which directly and immediately affect the state of the economy and finance, manufacturing and trading activities of firms that implement state orders, banks and other financial institutions, serving the budgetary programs of the US government.
In the US financial system (and many other countries), banks play a greater role. In accordance with the law says Segal banks are divided into commercial and investment.
A special role is played by the country's central bank - the Federal Reserve System (FRS). The role of the Fed increases continuously with increasing macroeconomic responsibility of the US government during the postwar decades, including in the 1990s. However, the Fed is only partially responsible for the supervision of banks and shares this feature with special Federal and State control authorities.
Gradually evolved over several centuries, the US financial system last few decades is the most powerful in the world. The US dollar continues to be freely traded worldwide reserve currency, and the most expensive companies in the world are still in the United States. That is why the system is necessary to study and understand the peculiarities of its functioning.
The foundation of any financial system is organizations engaged in production, concentration and redistribution of the money supply. In the United States, as in any other country in the world, these functions are assigned to the banking system. The role of the central bank, that is an intermediary between the state machine and the country's economy, the United States does the Federal Reserve. It oversees banks and regulates their activities, protects the credit rights of consumers engaged in money supply and comprehensive support for financial system stability. It includes the Federal Open Market Committee, exercising supervisory functions and at the same time engaged in the development of monetary policy in the United States.
The US banking system is made up of two main types of banks: commercial and investment. Commercial banks occupy a leading place in the financial market States. This deposit-taking institutions, the main source of income are the contributions. With the help of commercial banks make short-term trade finance and turnover of payments, including credit card transactions and checks. Just in the United States there are more than 10,000 commercial banks, which, in fact, are the engine of the entire financial system. Two-thirds of them are state banks, that is, carry out their activities in accordance with the laws of each state. The rest are in compliance with federal installations and are considered domestic banks.
Investment banks operating in the United States, with a formal approach to the problem can not be called traditional banking institutions, since they do not deal with the usual problems for banks such as deposit taking and lending. Further evidence of this is the fact that the supervisory body that monitors the activities of investment banks is not the Federal Reserve and the Securities Commission and the Stock Market. Investment banks are engaged in activities in three main areas: securities trading, underwriting (guaranteed issue and redeem shares unplaced shares of client companies) and advising on mergers, acquisitions and successful investment.
Alone in the banking system of the United States are the Federal Reserve Banks, which are engaged in the implementation of policies of the Federal Reserve System in the field. Such banks at the moment there are 12 pieces; they get their names depending on the location of the city, for example, Federal Reserve Bank of New York, Minneapolis and Richmond. Some of their features include tracking the state of local financial institutions.
One of the main elements of the US financial system and its power is a sign of the exchange. The stocks and commodity exchanges now passed through a huge number of transactions for the purchase and sale of securities and all kinds of goods. Every major company from any industry sooner or later in their development process begins to be quoted on the stock exchange in the search for investors and buyers of their products. Participants of exchange trades on located in the United States markets are as American companies and companies from any other country in the world.
The Federal Reserve System: Purposes and Functions. Board of Governors of the Federal Reserve System. 2005.
Wood, John H. A History of Central Banking in Great Britain and the United States (Cambridge University Press, 2005)