The Banking¹ System in the United Kingdom英国的银行体系
　　In the United Kingdom, financial institutions are categorized into two ma]or groups: the Recognized Banks and the Licensed³ Deposit Institutions. The criteria⁴ for each category are determined⁵ by the Bank of England~——the Central Bank. The Bank of England will consider the size of the institution, its management and also the number of participants who effectively direct the business, before decisions are made on the status of the financial institutions who apply for bank licenses⁶ in the United Kingdom.

　　Let us look at the Recognized Banks.

　　These banks provide a wide range of highly specialized⁷ banking services. According to the Banking Act 1979. "Recognized Banks" must satisfy the Bank of England of their high reputation and of their integrity, management and financial prudence⁸. The wide range of services include: i. the acceptance of sight and time deposits）; ii. loan and overdraft⁹ facilities; iii. foreign currency exchange and documentary credits and collections~; iv. financial advice for corporations and individuals; v. investment management and arrangements for the purchase and sale of securities.

　　As for Licensed Deposits institutions, they only provide a limited range of services. The prime services are still based on the acceptance of deposits from the public although they are not required to satisfy the rules laid down for Recognized Banks. To obtain a license², the institution must satisfy the Bank of England's requirement that all directors, controllers or managers of the institution must be an appropriate and proper person to hold that position and to conduce banking business in a proper manner.

　　Let us now look at the major types of financial intermediaries~ in the United Kingdom.

　　To begin with, we shall examine the role of the Clearing Banks. These are the dominating financial intermediaries in retail¹⁰ banking business~ in the United Kingdom. They handle the clearing functions of banks, and are responsible for most of the country' s cash distribution and money transfer functions, which include cheque payment services and also electronic fund transfers, etc.; The retail branch network of these banks is extensive with over 10,000 branches all over the country.

　　Another type of financial intermediaries in the United Kingdom are discount houses. Discount houses provide a primary channel through which the Bank of England operates in the discount market to implement¹¹ its monetary¹² policy. Because of their easy access to the money market, discount houses act as market-maker in bills since they are the major underwriters of the weekly issuers of the Treasury¹³ bills of the Bank of England. Therefore, discount houses not only provide short-term funds for the government, they provide a channel for banks to adjust their portfolio¹⁴ holdings, i.e., their liquidity¹⁵ positions.

　　The third type of financial intermediaries in the UK are the merchant banks~ and acceptance houses. Originally developed to handle businesses connection with trade, these merchant banks later expanded into foreign trade, foreign exchange and also bullion¹⁶ dealers¹⁷. Many of the merchant banks are also acceptance houses. Indeed, their functions have now expanded considerably¹⁸ into major overseas operations, specializing in company financial advice, takeovers and mergers¹⁹, underwritings which include the provision of additional capital through share floatation.

　　Finally, we should look at foreign banks in England. As a major international financial centre, London has acted as a magnet to over 450 foreign banks, which have set up representative offices, branches, or subsidiary companies. Business focus on these foreign banks cover foreign currency dealings, international finance deals to foreign companies and governments, trade finance services to business.