Money and Banking Industry
Grace Vaughn, Period 2
The three uses of money are a medium of exchange (purchase goods), a unit of account (put a price tag on things), and a store of value (save).
The six characteristics of money are durability, portability, divisibility, uniformity, limited supply, and acceptability.
The three sources of money's value are the Fiat system/faith in the currency (consumers believe there is value behind the dollar), market liquidity (money can be exchanged for something else), and gold/silver standard.
The United States uses the Fiat system. Money is given value because we believe it has value and something to back it up. There is no gold or silver backing our money up.
History of Banking
After the Bank of 1811 lost its charter, President Jackson removed all federal funds from the institution. The second bank was eventually formed.
Federal Reserve is the US central bank out of 12 banks. It is a system, and there is a commercial area that each bank works.
FDIC is the Federal Deposit Insurance Corporation. It was created in 1993 and has headquarters in Washington, D.C. It was created to provide deposit insurance and guarantee the safety of a depositor's accounts in member banks up to $250,000.
Banks offer checking and saving accounts, retirement accounts, mortgages, credit cards, investments, safety deposit, financial management, etc.
Banks use depositor's money to make loans. There are interests on these loans, and that is how banks make money.
There are Depositary Institutions (accept and manage deposits and make loans) and Contractual Institutions (insurance companies and pension funds).
Online banking has changed the face of transactional business and affects commerce across many trades and industries.