Chap 19 understanding money and banking

1,771 views
1,547 views

Published on

Published in: Economy & Finance, Business
0 Comments
1 Like
Statistics
Notes
  • Be the first to comment

No Downloads
Views
Total views
1,771
On SlideShare
0
From Embeds
0
Number of Embeds
2
Actions
Shares
0
Downloads
58
Comments
0
Likes
1
Embeds 0
No embeds

No notes for slide
  • http://www.slideshare.net/Subjectmaterial
  • Chap 19 understanding money and banking

    1. 1. Chapter 19 19 Understanding Money and Banking http://www.slideshare.net/Subjectmaterial
    2. 2. Sr. Chapter Chapter HeadingNo.No.1. 3 Understanding the Global context of business (110212)2. 4 Conducting Business Ethically and Responsibly (250212)3. 6 Organizing the Business Enterprise (030312)4. 7 Understanding Entrepreneurship and Small Business (100312)5. 8 Managing Human Resources (240312)6. 9 Understanding Employee Motivating, Satisfying & Leadership (3103, 0704)7. 11 Understanding Marketing Processes and Consumer Behavior (140412)8. 16 Managing Quality and Productivity (280412)9. 17 Managing Information Systems and Communication Technology (0505)10. 19 Understanding Money and Banking (1205)11. 20 Intermediate Term and Lease Financing
    3. 3. 1. WHAT IS MONEY2. THE US FINANCIAL SYSTEM3. THE FEDERAL RESERVE SYSTEM4. THE CHANGING MONEY AND BANKING SYSTEM5. INTERNATIONAL BANKING AND FINANCE
    4. 4. Money Any object that portable, divisible, durable, and stable and serves as a medium of exchange, a store of value, and a unit of account Any object generally accepted as payment for goods and services
    5. 5. Characteristics of a Good Money System Divisible Portable Durable 12 TH E UN IT ED ST AT ES OF A M ER ICA TH E U N ITED STAT ES OF AM ERIC A T H I S N O T E IS L E G A L T E N D E R F O R A L L D E B T S , P U B L I C A N D P R IV A T E A FED ER AL RE SE RVE N O TE L 70 7 44 62 9F W A S H IN G T O N , D .C. 12 Hard to H 293 L 70 74 46 29 F 12 S E RIES 12 19 85 O N E D O LLA R O N E D O LLAR Counterfeit Stable in Value
    6. 6. Functions of Money Medium of exchange  a single medium of exchange for goods and services instead of barter Store of value  can be used for future purchases Unit of account  allows measurement of the relative value of goods and services
    7. 7. Credit Cards Plastic money They are popular because  Convenient  Safe  Very profitable for the issuer  11 to 20 % interest on dues paid to card issuers  Merchants pay fee to card issuers 7
    8. 8. The Money Supply Time Deposits Demand TotalCurrency + = Total + & Money = Deposits M1 Market Accts. M2 *SA *SA = Seasonally Adjusted
    9. 9. The money supply could be explained as follows Liquidity is how fast something can be turned into cash. Students may recall this concept from Chapter 18. Currency includes all coins and paper money spent to purchase goods and services. To the surprise of many, currency is a small portion of the money supply (only about 20-25%). Traveler’s checks, money orders, and cashier’s checks are all considered currency. Demand deposits are the other part of M1. These are deposits held at banks that depositors can write checks on for immediate payments. No specific notice has to be provided to the banks. Checks are used in about 70% of the transactions in the U.S. but numbers are decreasing as more consumers begin to use online services and automatic payment options. Total M1 includes the currency and demand deposits of the money supply. Total M2 includes time deposits and money market accounts (funds of short term, low risk fin securities purchased with the assets of investor owners, pooled by a non-bank institution) plus the total currency and demand deposits from M1. Students should be aware that time deposits are generally referred to as savings accounts.
    10. 10. Financial Institutions Traditionally consisted of four financial pillars  Chartered banks  Alternate banks (trust companies, credit unions)  Life insurance companies and specialized lending and saving intermediaries  Investment dealers Commercial Bank: Federal or state-chartered financial institutions accepting deposits that it uses to make loans and earn profits Differences are now blurred due to changes in financial industry regulations
    11. 11. Special Financial Services Pension and Trust Services International Services  Currency exchange  Letter of Credit (LC) Financial Advice and Brokerage Service Automated teller machine ATM Electronic Fund Transfers 11
    12. 12. THE FEDERAL RESERVE SYSTEM Central bank, which acts as the government’s bank, serves member commercial banks, and controls the nation’s money supply 12
    13. 13. Functions of Fed1. The govt bank:  How many notes (bills) to produce, how many to destroy  Lends money to the govt2. The Banker’s bank  Banks borrow money on interest from fed3. Check Clearing4. Controlling the money supply5. Monetary policy;  money supply and interest rates 13
    14. 14. THE CHANGING MONEY AND BANKING SYSTEM Electronic Technologies  Debit Cards:  Plastic card that allows an individual to transfer money between accoutns  Point of Sale Terminal  Electric device that accepts debit card transactions  E-cash  Money that moves among consumers and businesses via digital electronic transmissions 14
    15. 15. International Bank Structure World Bank  UN agency that provides a limited scope of financial services, such as funding national improvement in undeveloped countries International Monetary Fund (IMF)  UN agency consisting of about 150 nations that have combined resources to promote stable exchange rates, provide temporary short-term loans, and serve other purposes 15

    ×