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Published byPriscilla Roberts Modified over 7 years ago
Money and Banking
What is Money? Functions of Money 1.medium of exchange 2. Store of value (hold wealth until ready to use) 3. Measure of value (how much goods & services worth) Types of Money Anything people are willing to accept in exchange for goods & services (ex. Animal hides, gems, tobacco). Most familiar type is coins & currency (coins & paper money) Why money has value-people’s confidence in money
Types of Banks Commercial Banks-offer full banking services. Most people have their checking & saving accounts in commercial banks Savings and Loan association (S&Ls)-traditionally loaned money to people buying homes. Today offer many of the same services as commercial banks Credit Unions-work on a not-for-profit basis. Sponsored by labor unions, government, & big business. Open only to members of the group that sponsors the bank. Low cost financial institution
Types of Services checking accounts savings accounts certificates of deposit (CD)-loan a specific amount of money to bank and in return the bank pays you interest during that time period. make loans- home, car, equity, etc
Banks are closely regulated. The United States has one of the safest financial systems in the world. Banks carry insurance with the Federal Deposit Insurance Corporation (FDIC) to protect the customer’s money in case the bank fails.
Short History of Banking Before Civil War, money was printed by individual state banks 1863 National Banking Act-banks could have a national charter & established national currency 1913 Federal Reserve Act- The Federal Reserve would be the nation’s central bank, issue money, & control the money supply 1930s- 12,000 banks closed due to panic caused by Great Depression 1930s- FDIC established 1999 Gramm-Leach-Bliley Act-gave banks greater freedom to offer financial services
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