Country report on the monetary policy of a central bank in the UK
Financial crisis harmed global financial market rapidly during the year 2007 to 2008. Crisis affected the developed countries rapidly. Financial crisis hit American financial market by Lehman Brother’s bankruptcy. Financial crisis is reducing the scope of housing market efficiency in the UK. Return of the investment of the housing markets are declining rapidly. Droop in housing demands harmed the economy of the UK. Institutional and individual investors are not able to recover proper return as housing estates are not able to earn profits in the time of financial crisis (Bankofengland.co.uk, 2015b).
Debt interest rates are depending on potential mortgage assets. During the years of 2007 and 2008, potential and already investors are having lower ability to invest money. Financial institutions are having low investment. People at that moment of time preferred to hold liquid cash rather than investing those. This policy of the people reduced the potentials of mortgage keeping. Securities of loan payment are facing hindrance of risk potentials. In the UK many small sized banks are losing out the rate of reserve which they are unable to provide credit. Housing industry of the UK faced certain risks regarding collection of investment from money and exchange industry. Money exchange market of the UK has lost the feasibility during 2007 and 2008 period.