Using an analogy of two buckets balanced on a set of scales, this video explores the dynamic nature of bank funding and bank lending. It focusses on bank funding costs, which are integral to a wide range of economic variables with important implications for both monetary and financial stability.
The buckets analogy is used to illustrate the potential impact of a rise funding costs for a bank’s profitability and broader economic conditions.
A Quarterly Bulletin article explores these issues in more detail. It also sets out a framework for understanding some of the main drivers of bank funding costs:
http://www.bankofengland.co.uk/publications/Documents/quarterlybulletin/2014/qb14q4prereleasebankfundingcosts.pdf
Filmed by James Oxley