Money and Banks
By Mo Hammoud
- Money is a current medium of exchange in the forms on coins and banknotes.
- Money has 3 uses, the first being medium of exchange that means money can be used for buying products and services. Money is also used as an unit of account where its current standard is used for measuring the worth of products and services. Finally it's also used for storing value, when it is stored in a bank its values retains and can later be spent.
- The 6 characteristics of money are Generally Acceptable, Easily Counted and Measured, Durable, Convenient, Easily Controlled, and Inexpensive to produce.
- The sources of money's value come from Commodity money, Representative money, and Fiat money.
- The United States' money gets its value from the Fiat system.
Hiatory of Banking
- When the first bank of the United States was created in 1791, its main role was being the money lender to both private business and the government.
- After the bank of 1811 lost its charter other banks began competing for money supplies and other resources resulting in a bank war.
- The Federal reserve is a huge government bank that mints the money and allows other banks to bank with it.
- It is the Federal Deposit Insurance Corporation which provides deposit insurance for its members up to 250,000$.
- Economist calculate the money supply by calculating the total stock of currency and other liquidation devices using the m1 method, and currently the U.S money supply is 4028362 USD.
- Banks offer many services such as checking accounts, saving accounts and time deposits, debit cards, credit cards, smart cards, and electronic funds transfers.
- When banks make loans they charge a higher interest than the interest they pay you which in turn makes them a profit, they also sell stocks and bonds.
- There are a multitude of financial institutions including commercial banks, investment banks, insurance companies, brokerages, investment companies, unit investments trusts, face amount certificate, management investment companies, nonbank fincial institutions, saving and loans, credit unions, and shadow banks.
- Electronic banking has affected the banking world by allowing people to conduct their banking businesses in the comfort of there own home, many people don't feel the need to go to the bank anymore considering they can access it just as well through the computer or ATM.