Banking-Money and Credit
In modern banking, money and credit are the two main parts of any economy’s financial system. There are more than 30,000 different banks around the world with incredible assets. The ten largest banks alone account for approximately $25 trillion. Banking may seem very complicated, but the original idea was to make life easier. In the 11th century, Italy was the center of European trade. Merchants from all over the African continent gathered to buy and sell their goods, but there was a problem: there were too many coins in circulation. In Pisa, traders have to deal with seven different currencies and constantly change their currencies.
The term “bank” comes from such securities transactions, which are usually conducted in public banks. Derived from the word “bank”, which means “bank” in Italian. Travel, the risks of counterfeit goods, and the difficulty of obtaining loans are all thought-provoking. Now is the time to adopt a new business model: housing brokers have begun to provide loans to entrepreneurs, and some merchants have developed cashless payment methods.
Banking networks spread across Europe, even paying tribute to churches or European kings. In short, banks participate in risk management. This is a simplified version of how it works. People deposit money in banks and earn a small amount of interest. The bank takes the money and lends it out at a higher interest rate. This is a calculated risk because some lenders will not pay your loan. This process is important to our economic system because it provides people with resources to buy resources such as houses or industries to conduct business and develop.
Banks absorb funds not used by savers and convert them into funds that society can use for its own purposes. Other sources of income for banks include accepting savings, using credit cards to do business, buying and selling foreign currencies, escrow, and cash settlement services. -Put financial products into production on time to bring short-term benefits involving higher risks. During the financial boom, the financial structure adopted by most large banks is usually poorly understood, transactions are, as usual, making money quickly, and traders earn millions of dollars. In bonds. This is nothing more than a game of chance, it destroys the entire economy and society. As in 2008, when a bank like Leeman Brothers actually lends to anyone who wants to buy a house, he exposes the bank to extremely dangerous risks. This caused the real estate market in the United States and other countries to collapse.
Europe, causing stock prices to rise. The sharp decline eventually led to the global banking crisis. sis and one of the biggest financial crises in history. Hundreds of billions of dollars have just evaporated. Millions of people have lost their jobs and a lot of money. Most of the world’s leading banks have been fined billions of dollars, and bankers have become some of the most trusted professionals.
The US government and the European Union had to formulate a huge rescue plan to buy back non-performing assets and prevent bank failures. New rules were formulated to regulate the banking industry, and mandatory bank emergency funds were established to ease the impact of the new financial crisis, but the banking industry successfully lobbied to prevent other tough new laws. Financing is quickly attracting people, and new investment banks charge annual fees instead of sales commissions. This provides incentives to act on behalf of customers or credit unions, a cooperative program initiated in the 19th century to avoid usury.
In short, they provide the same financial services as banks, but focus on total value rather than maximizing profits. The self-designated goal is to help members create opportunities, such as starting a small business, expanding a farm, or building family homes by investing in the community.
They are controlled by their members, and they also elect the board of directors democratically. Credit union systems vary widely across the globe, from a few members to organizations with billions of dollars and hundreds of thousands of members. The interests of its members have an impact on the risks that credit cooperatives are willing to take, which explains why credit cooperatives, although also affected, have weathered the recent financial crisis better than traditional banks.
Funders are satisfied with being part of a larger project and can invest in ideas they believe in. If the project fails, spread the risk sufficiently to limit the damage. Last but not least is microfinance. In the banking system, loans include a large number of very small loans, mainly in developing countries, these loans can help people out of the crisis of poverty.
In the past, people who could not get the funds needed to start a business because they were deemed inappropriate, now microfinance has become a multi-million dollar business. Don’t walk on the street, but the role of banks in providing funds to individuals and businesses is vital to our society and needs to be honored. Who will do it and how it will do it in the future depends on us. Although money and credit in the banking industry are now regarded as the foundation of the economy and have made important contributions to economic growth, they are also the main engines of currency and monetary and financial stability. But how did the history of the banking industry begin?
The term “bank” means “bank” and refers to a state-owned bank where money changers usually exchange coins or banknotes in the market. However, it was the goldsmiths of London in the 17th century who developed the banking industry in a modern form, the myth of gold. His desire to keep the goal of wealthy customers in his personal vault will soon transfer this area to others in exchange for promissory notes and interest, which is a great banking business.
To get a return from loan interest, depositors or people who deposit too much money deposit money in banks. On the other hand, borrowers or people who lack money are willing to pay interest on the money the bank borrows to achieve their goals, just like banks make money, the main source of income for banks is the difference between the interest they pay. The depositor pays and the interest earned from the borrower; the bank also makes a profit by charging commissions for the services and investments the bank provides to customers. So why should banks be regulated?
The bank collects funds from depositors in the form of small deposits and repackages them. On the other hand, if all these reasons can explain the central bank’s main role in protecting depositors, they may not be able to repay the money borrowed from the bank, and the bank sometimes invests in risky assets. What role does the central bank play to make money by monitoring the appropriate risks that banks take? The central bank monitors monetary policy to achieve certain goals, such as currency stability.
Low inflation and full employment; determine interest rates that affect bank pricing systems and money supply economic issues; currency and bank approval. The central bank also sets thresholds for capital and reserve requirements to provide liquidity in a crisis, through margin calls and other toolsets loan policies and acts as a lender of last resort to provide funds to banks that need liquidity.
Nowadays, various types of banks can meet the different needs of consumers and allow them to choose the financial management methods of retail banks. For example, it provides services to private, commercial, and corporate banks and small and medium enterprises. Large companies, investment banks specializing in large and complex financial transactions, and private banks provide personalized banking and financial services for the wealthy. How much do we know about the future of the banking industry today? Direct channels such as mobile and the Internet are becoming more and more important in private client business.
In our daily lives, today’s customers expect financial companies to listen, respond and provide services through social media. Customers in all market segments want personalized, convenient, and reliable services and 24/7 availability.
