Banks and credit system of exchange essay

Coins are manufactured in the government mint but they are put into circulation through the central bank. One of the aims of a central bank in an underdeveloped country is to improve its currency and credit system. All these facilities are aimed at helping the customers with their finances.

To transfer and settle claims of one bank upon others, the central bank operates a separate department in big cities and trade centres. A good illustration is the Monte de Piedad Bank. These accounts offer facilities such as overdraft that are beneficial for the businesses.

In order to discourage the flow of resources into speculative borrowing and investment, the central bank should follow a policy of discriminatory interest rates, charging high rates for non-essential and unproductive loans and low rates for productive loans. A suitable interest rate policy: De Kock regards this function as a sine qua non of central banking.

Businessmen can expand their businesses with this facility. Money conditions become tight and there is a tendency for the rate of interest to rise automatically. They are the issuing of licences; the regulation of branch expansion; to see that every bank maintains the minimum paid up capital and reserves as provided by law; inspecting or auditing the accounts of banks; to approve the appointment of chairmen and directors of such banks in accordance with the rules and qualifications; to control and recommend merger of weak banks in order to avoid their failures and to protect the interest of depositors; to recommend nationalisation of certain banks to the government in public interest; to publish periodical reports relating to different aspects of monetary and economic policies for the benefit of banks and the public; and to engage in research and train banking personnel etc.

Risk Compared With Australia Banks And Hsbc

Bank Essay 1 words The banking system that involves accepting deposits and lending money initiated centuries back in various parts of the world. In the context of economic growth, as the economy develops, a progressive rise in the price level is inevitable. Banks generate revenue by lending money.

Custodian of cash reserves of commercial banks: A network of co-operative credit societies with apex banks financed by the central bank can help solve the problem. Financial institutions are localised in big cities in underdeveloped countries and provide credit facilities to estates, plantations, big industrial and commercial houses.

The Philippine Amanah Bank was organized in s to provide for the turning economic demands of Muslim Filpinos. Inflationary or deflationary trends need to be prevented. The aim of credit control is to help in achieving full employment and accelerated growth with stability in the economy without inflationary pressures and balance of payments deficits.

De Kock regards this function as a sine qua non of central banking.They include the banks and credit institutions (Mankiw N.

Essay on Bank

G. ). Conclusion The essay has defined a financial institution and we have given examples of financial institutions and. Definition of Banks—Banks are financial institutions that help people to save and borrow a growing economy, the banks help to create a new pool of money to be ised for other economic complement the money or cash system of exchange with the system of credit.

Essay on the Objectives of Credit Control by the Central Bank: Credit control is the means to control the lending policy of commercial banks by the central bank.

The central bank controls credit to achieve the following objectives. This encompasses a broad range of organizations that manage money, including credit unions, banks, credit card companies, insurance companies, accountancy Continue reading “Essay: The importance of accessing credit”.

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The system improvised over the time and the banks these days offer various other facilities in addition to the basic depositing and lending of money.

People are encouraged to keep their money in the banks because it is a safe and secure way to store the money.

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Banks and credit system of exchange essay
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