MONEY• Any object that is portable, divisible, durable and stable and that serves as medium of exchange, a store of value and a unit of account.• M1 (CURRENCY /Cash/Demand Deposits)• M2 (Include M1/ Time Deposits)• Plastic Money
HOW BANK CREATE MONEY ? Financial activities of a conventional bank LEND LENDDEPOSITORS BANK CUSTOMERS INTEREST INTEREST
CENTRAL Reserve System• Central Bank of the country , which acts as a government bank, serves member commercial banks and controls the nation’s money supply.• The Government’s Bank.• The Banker’s Bank.• Check Clearing.
TOOLS Of CENTRAL BANK• Reserve requirements.• Discount Rate controlling.• Open market Operations.• Selective Credit Controls.
CHANGES IN FINANCIAL INDUSTRY1. Deregulation2. Interstate Banking3. The Impact of Electronic Technologies Debit Card Smart Card E Banking
International Banking & Finance• It is an organization that invests directly in private companies and makes or guarantees loans to private investors.• It is affiliated t the World Bank and is part of the World Bank Group Abbreviation.Exchange Rate:• Rate at which one currency exchanges against other currency.
International Trade• The business of buying ad selling commodities beyond national borders.Government Influences on Exchange Rates:• A nation’s economic authorities take action to correct its balance of payments condition. Typically they will devalue or revalue the nation’s currency.
International Bank Structure• The World Bank & The IMF To promote the stability of exchange rates To provide temporary, short term loans to member countries To encourage members to cooperate on International monetary issue. To encourage development of a system for international payments.