There are many well established financial institutions that
every investor should be aware of. Euroinvestor has picked out some
of the most famous so you can get to know them better.
The European Financial Stability Facility
The European Financial Stability facility (EFSF) was set
up in may 2010 as a temporary facility to raise loans by the issue
of bonds and other debt instruments. Its function is to
support members of the eurozone in times of economic difficulty,
and it is currently involved in the latest round of bailouts. With
its headquarters in Luxembourg, the EFSF generates the cash needed
itself on the open investment market, and is not actually a
fund.
Fannie Mae and Freddie Mac
Officially known as the Federal National Mortgage
Association (FNMA) and
the Federal Home Loan Mortgage Corporation (FHLMC), Fannie Mae and
Freddie Mac are US government sponsored enterprises (GSEs),
with the purpose of maintaining and improving liquidity in the US
mortgage market. The way they do this is by buying mortgages on the
secondary market then selling them on as mortgage backed securities
to investors on the open market. This brings more money into the
cash pool available for mortgages from investors.
The European Central Bank
The European Central Bank (ECB) is the
central bank of the Euro, and sets the monetary policy of all the
countries in the eurozone. Formed in 1998 and based in Frankfurt,
its role is to maintain price stability across the eurozone by
being in control of the supply of money and of interest rates. It
is also the sole authority on issuing euro banknotes.
Organisation of the Petroleum Exporting
Countries
Better known as OPEC, this global
cartel is made up of 12 oil producing companies and supplies the
world with around three quarters of its current oil production.
Formed in 1960 at the Baghdad conference, the OPEC
maintains prices by imposing maximum production quotas on its
members, although with oil prices currently skyrocketing, most
member states are operating at near maximum capacity.
The International Monetary Fund
Known as the IMF, its aim is to
ensure the stability of the international financial systems. Formed
in 1945 and with its headquarters in Washington, the IMF had the
initial aim to assist post-war economic reconstruction.
It now has 187 members and is most well known for
bailing out other countries that are having major problems with
their economies, lending them huge amounts of cash.
Investment Banks
Investment banks are financial institutions that provide
individuals, corporations and governments with ways to raise funds.
This is often done by underwriting or acting as an agent for the
client in issuing securities. Another service they offer is
to assist companies with mergers and acquisitions.
The Bank of England
The
Bank of England is the central bank for the entire United
Kingdom. Founded in 1694 as a private company, the BoE has its
headquarters in the City of London and acts as the governments
banker. The main role of the BoE is to provide and regulate the
UK's currency. It has a monopoly on issuing bank notes in England
and Wales and regulates the issue of banknotes from Scotland and
Northern Ireland.
The Financial Services Authority
The FSA is an organisation
that is in charge of regulating the financial and investment
industries in the UK. Founded in 1985, the FSA is an independant
company financed by the industry itself, so it does not have to
rely on public funding.
The London Stock Exchange
The LSE
is a stock exchange that provided companies with a forum to raise
capital. Founded in 1801, the LSE is based in London and
can provide trading services so investors can
trade shares, and other instruments and commodities, with each
other, via the intermediaries of their brokers and the LSE's
electronic trading systems. The LSE also provides a derivatives
market through its EDX service.