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Fourth Edition Copyright ©2003 Prentice Hall, Inc. PART Understanding Financial Issues
Copyright ©2003 Prentice Hall, Inc Chapter 14 Understanding Money and Banking
Copyright ©2003 Prentice Hall, Inc A banker is a fellow who lends you his umbrella when the sun is shining, and wants it back the minute it begins to rain. ~ Mark Twain
Copyright ©2003 Prentice Hall, Inc Key Topics Money and its forms in the U.S. U.S. financial institutions How banks create money and how they are regulated The Federal Reserve system Changes in the financial industry International banking and finance
Copyright ©2003 Prentice Hall, Inc Portability Divisibility Durability Stability What Is Money?
Copyright ©2003 Prentice Hall, Inc The Functions of Money Medium of Exchange Store of Value Unit of Account
Copyright ©2003 Prentice Hall, Inc The Cost of Producing U.S. Coins Golden Dollar cents Half Dollar 9.93 cents Quarter 4.29 cents Dime 1.88 cents Nickel 3.13 cents Penny.81 cents Source:
Copyright ©2003 Prentice Hall, Inc Just How Much Is a Ton of Money Worth? Dollar Bills $908,000 Quarters $40,000 Pennies $3,632 Source: State of Michigan Office of Financial and Insurance Services,
Copyright ©2003 Prentice Hall, Inc The Money Supply M1: Spendable Currency Demand deposits M2: Spendable plus Convertible Time deposits Money market mutual funds Savings deposit
Copyright ©2003 Prentice Hall, Inc Money Supply (trillions) Money Supply Growth M-1 M-2
Copyright ©2003 Prentice Hall, Inc Credit Cards A Major Financial Force Credit cards accounted for almost half of all transactions for the year 2000 Credit cards are a large and growing business Convenient for users Highly profitable for issuers
Copyright ©2003 Prentice Hall, Inc U.S. Financial Institutions Commercial Banks Diversification and mergers Commercial interest rates Savings and Loan Associations Mutual Savings Banks
Copyright ©2003 Prentice Hall, Inc U.S. Financial Institutions Credit Unions Non-Deposit Institutions Pension funds Insurance companies Finance companies Securities investment dealers
Copyright ©2003 Prentice Hall, Inc Special Financial Services Individual Retirement Accounts (IRAS) Trust Services International Services Currency exchange Letters of credit Bankers acceptance
Copyright ©2003 Prentice Hall, Inc Special Financial Services Financial advice and brokerage services Automated teller machines Electronic funds transfer
Copyright ©2003 Prentice Hall, Inc Banks As Creators of Money $100.00$10.00$90.00$ Deposit Money held in Reserve by Bank Money to Lend Total Supply
Copyright ©2003 Prentice Hall, Inc The Federal Reserve System Structure Board of governors Reserve banks Member banks Functions Banking for the government Banking for banks Controlling the money supply
Copyright ©2003 Prentice Hall, Inc Reserve requirements Discount rate controls Open market operations Selective credit controls Controlling the Money Supply The Tools of the Fed
Copyright ©2003 Prentice Hall, Inc The Changing Money and Banking System Interstate BankingDeregulation
Copyright ©2003 Prentice Hall, Inc Electronic Technologies A Dramatic Change Debit Cards Smart Cards E-cashE-cash
Copyright ©2003 Prentice Hall, Inc The International Payments Process Olive Exchange (Greece to U.S.) Equipment Exchange (U.S. to Greece.) U.S. ImporterU.S. ExporterU.S. Bank Greek ExporterGreek ImporterGreek Bank
Copyright ©2003 Prentice Hall, Inc Bolstering International Trade International Monetary Fund (IMF) Stable exchange rates Temporary short-term loans Cooperation on global monetary issues International payments system World Bank Provides a limited scope of financial services World Bank Provides a limited scope of financial services
Copyright ©2003 Prentice Hall, Inc Chapter Review Define money and its forms in the U.S. Describe U.S. financial institutions Explain how banks create money and how they are regulated Discuss the functions and tools of the Federal Reserve system Identify how the financial industry is changing Understand international banking and finance
Money and Banking Chapter 31 McGraw-Hill/Irwin Copyright © 2009 by The McGraw-Hill Companies, Inc. All rights reserved.
PART 9 THE MONEY ECONOMY Money and the Monetary System CHAPTER 26.
Chapter 12 Money and Financial Institutions. Money and Banking The Purpose of Money- Enables people and businesses to buy and sell goods and services.
Chapter 13: Money and Banks McGraw-Hill/Irwin Copyright © 2013 by The McGraw-Hill Companies, Inc. All rights reserved. 13e.
Money, the Price Level, and Inflation CHAPTER 25.
Chapter 10SectionMain Menu Money What is money? What are the three uses of money? What are the six characteristics of money? What are the sources of money’s.
Unit 4: Money and Monetary Policy 1. Types of PERSONAL Investments Assets- Anything of monetary value owned by a person or business. 2.
Chapter 12 Money and Financial Institutions Section 12.2 Types of Financial Institutions.
1 Financial Markets and Institutions Leng Ling Department of Economics & Finance Georgia College & State University.
Essex EC248-2-SP Lecture 9 Financial Innovations: Nonbank Finance and Electronic Money Alexander Mihailov, 13/03/06.
Chapter 16 Section 2 Functions of the Federal Reserve.
Copyright 2003 McGraw-Hill Australia Pty Ltd PPT Slides t/a Financial Institutions, Instruments and Markets 4/e by Christopher Viney Slides prepared by.
Money & Banking Chapter 10 Section 3 Banking Today.
McGraw-Hill/Irwin ©2008 The McGraw-Hill Companies, All Rights Reserved Chapter One An Overview of Banks and the Financial-Services Sector.
Money Creation Chapter 32 McGraw-Hill/Irwin Copyright © 2009 by The McGraw-Hill Companies, Inc. All rights reserved.
Banks and their products VOŠ – 3. ročník – 2. semestr.
10/22/20141 Money and Banking Chapter Outline The Functions of Money The Functions of Money The Components of Money Supply The Components of Money.
© 2010 Pearson Addison-Wesley CHAPTER 1. © 2010 Pearson Addison-Wesley.
Essex EC248-2-SP Lecture 1 Money, Banking and the Financial System: An Introduction Alexander Mihailov, 16/01/06.
Macroeconomics James B. Wilcox RESOURCES PROVIDED BY: THE UNIVERSITY OF SOUTHERN MISSISSIPPI CENTER FOR ECONOMIC AND ENTREPRENEURSHIP EDUCATION, MISSISSIPPI.
Slides prepared by Thomas Bishop Copyright © 2009 Pearson Addison-Wesley. All rights reserved. Chapter 14 Money, Interest Rates, and Exchange Rates.
Chapter 11: Payment Systems For Electronic Commerce.
Copyright 2007 McGraw-Hill Australia Pty Ltd PPTs t/a McGraths Financial Institutions, Instruments and Markets 5e by Viney Slides prepared by Anthony Stanger.
1 Chapter 25 Money Creation Key Concepts Key Concepts Summary Summary Practice Quiz Internet Exercises Internet Exercises ©2000 South-Western College Publishing.
Chapter Nineteen The American Economy Personal Finances ~~~~~ Banks and Banking.
ECO102 Principles of Macroeconomics Problem Session-2 by Research Assistant Serkan Değirmenci
The Federal Reserve In Action. What is the Fed? Central bank of the United States Established in 1913 Purpose is to ensure a stable economy for.
Copyright © 2007 Pearson Education, Inc. Slide 6-1 E-commerce Kenneth C. Laudon Carol Guercio Traver business. technology. society. Third Edition.
Chapter Fourteen. Open Market Operations The Fed buys and sells securities, usually government securities When the Fed buys securities the money supply.
Copyright © 2002 by Harcourt, Inc.All rights reserved. Initial Public Offerings Investment Banking and Regulation The Maturity Structure of Debt.
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