MONEY AND BANKING

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MONEY AND BANKING
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MONEY

• Money is any generally accepted means of payment
  for delivery of goods or settlement
  (porozumienie) of debt. It has four main
  functions
• a medium of exchange or means of payment
• a store of value
• a unit of account
• a standard of deferred (odraczac) payment

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MONEY

• Different kinds of money
• Commodity money
• Token money
• IOU money

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BANKING SYSTEM

• A bank is a business that provides financial
  services, usually for profit. Traditional banking
  services include receiving deposits of money,
  lending money and processing transactions.
• A commercial bank is usually defined as an
  institution that both accepts deposits and makes
  loans.

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BANKING SYSTEM

• A little bit of history...
• The primary purpose of a bank was to provide
  liquidity to trading companies. For centuries,
  the banking industry only dealt with businesses,
  not consumers. Banking services have expanded to
  include services directed at individuals and risk
  in these much smaller transactions are pooled.

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BANKING SYSTEM

• A bank generates a profit from the differential
  between what level of interest it pays for
  deposits and other sources of funds, and what
  level of interest it charges in its lending
  activities. This difference is referred to as the
  spread between the cost of funds and the loan
  interest rate. However, lending activities still
  provide the bulk of a commercial bank's income.

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Services typically offered by banks (1/2)

• Accounts
• Current accounts
• - Packaged accounts
• - Standard fee free accounts
• - Basic current accounts
• Student and Graduate accounts
• Kids and youth accounts
• Savings accounts
• Offset accounts

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Services typically offered by banks (2/2)

• Credit, ATM and debit cards
• Cashing cheques
• Money transactions
• Personal and business loans
• Mortgages
• Insurence products
• Pension and retirement planning
• Storing valuables

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TRANSACTION CHANNELS

• A branch, banking centre or financial centre
• ATM (Asynchronous Transfer Mode)
• Telephone banking
• Online banking
• Mail

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TYPES OF BANKS

• Retail banking
• Business banking
• Corporate banking
• Investment banking

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BANKS IN THE ECONOMY

• Role in the money supply
• A bank raises funds by attracting deposits,
  borrowing money in the inter-bank market, or
  issuing financial instruments in the money market
  or a capital market. The bank then lends out most
  of these funds to borrowers.

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BANKS IN THE ECONOMY

• Size of global banking industry
• Worldwide assets of the largest 1,000 banks grew
  15.5 in 2005 to reach a record 60.5 trillion,
  EU banks held the largest share.
• The US had by far the most banks (7,540 at
  end-2005) and branches (75,000) in the world.

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BANKS IN THE ECONOMY

• Banking crisis
• Liquidity risk
• Credit risk
• Interest rate risk

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BANKING SYSTEM

• Regulations
• Bank regulations are a form of government
  regulation which subject banks to certain
  requirements, restrictions and guidelines, aiming
  to uphold the soundness and integrity of the
  financial system.
• No government can allow its banking system to fail

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Top five banking groups in the world ranked by
Shareholder equity (m)
 
 
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Top five banking groups in the world ranked by
assets
 
 
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THE END

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