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Money And The Banking System

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Money And The Banking System

  1. 1. Money and the Banking System Objective: Examine the Banking System and Money
  2. 2. How Money is Used <ul><li>Money is used as a medium of exchange </li></ul><ul><li>Money is also used as a standard of value </li></ul><ul><li>Money can be used as a store of value </li></ul><ul><li>Diamonds and gold are often used as stores of value </li></ul>
  3. 3. Characteristics of Money <ul><li>Must be durable, portable, divisible, and stability </li></ul>
  4. 4. What Banks Do <ul><li>Three common services are checking, savings, loans </li></ul><ul><li>A checking account is money a person leaves with the bank until its needed </li></ul><ul><li>A savings account is where people store their money </li></ul><ul><li>Banks use this money for loans and pays you interest </li></ul>
  5. 5. Banking <ul><li>Banks charge more interest on loans then it pays on saving accounts </li></ul><ul><li>The difference between the two rates is profit for the bank </li></ul>
  6. 6. Banking in the U.S. <ul><li>America was founded in 1776 </li></ul><ul><li>With no central currency </li></ul><ul><li>1791 the U.S. started the First Bank of the United States </li></ul><ul><li>In 1863 some felt the bank was too powerful and closed it. </li></ul>
  7. 7. Banking in the U.S. <ul><li>With the national bank closed, smaller banks begin to print their own money </li></ul><ul><li>When these banks went out of business their money was now worthless </li></ul><ul><li>This forced people to keep lists of which banks are good or not </li></ul>
  8. 8. Banking in the U.S. <ul><li>In 1863 the U.S. again established a national bank </li></ul><ul><li>Soon the country had a single currency again </li></ul><ul><li>Today national banks are apart of the Federal Reserve System </li></ul>

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