Role of bank in today's world workshop, Financial literacy, Erasmus+ project New Literacy Set, 2015-2017

1. The New Literacy Set Project
2015- 2017
Video

2. WHAT IS A BANK?
A BANK IS A FINANCIAL
INSTITUTION THAT
BORROWS MONEY FROM
SOME PEOPLE AND THEN
LENDS OUT THIS MONEY TO
OTHER INDIVIDUALS IN
ORDER TO EARN A PROFIT.

3. How Does a Bank Work and Why Do Banks Make So Much Money.mp4
Video

5. WHAT IS THE SIMPLE INTEREST?

6. Alex has to pay back euro 1.100

7. PRINCIPAL
INTEREST

8. Alex to borrowthe money
for2 Years?
Alex pays an interest of Euro 200

9. BANKS
COMMERCIAL
BANKS
INVESTMENT
BANKS
RETAIL
BANKS

10. Retail Bank provides
financial services for families and
small businesses. The three most
important functions are credit,
deposits, and money
management.

11. WHAT IS A COMMERCIAL BANK?

12. MAIN FUNCTIONS
OF A COMMERCIAL BANK
RECEIVE DEPOSIT
COLLECTION
SAFEGUARD MONEY
DISBURSE PAYMENTS
INVEST FUNDS
LEND MONEY
MAINTAIN AND SERVICE SAVINGS DEPOSITORS
MAINTAIN CUSTODIAL ACCOUNTS

13. PAYMENTS
• ATMs PAYMENTS
• CREDIT – DEBIT
CARD SYSTEM
• INTERBANK
GIRO SYSTEM
• SAFETY DEPOSIT
BOXES
FINANCIAL
INTERMEDIATION
• SAVING
ACCOUNT
• CHECKING
ACCAUNT
• BANK DEPOSIT
• CERTIFICATE
OF DEPOSITE
• LOAN
• MORTGAGE
FINANCIALSERVICE
• INSURANCE
• INVESTMENT
FUND

14. WHAT IS AN INVESTMENT BANK?

17. Universal banking is a banking
system in which banks provide
a wide variety of financial
services, including commercial
and investment services.

18. An Ethical Bank is a bank concerned
with the social and environmental
impacts of its investments and loans.
The ethical banking movement
includes:
 ethical investment
 impact investment
 socially responsible investment
 corporate social responsibility and is
also related to such movements as the
fair trade movement, ethical
consumerism, and social enterprise.

19. A Central Bank is responsible for its country’s financial affairs and monetary
system. Each central bank may have various specific tasks, nevertheless they can
be said to have the same main objectives:
• to oversee monetary policy
• to maintain price stability by controlling inflation
• to manage the production and distribution of the nation’s currency
• to support the nation in times of crisis to prevent its banking system
from failing
• to manage interest rates
• to serve as a banker for other banks

20. The European Central Bank is not responsible for the banking and
financial matters of a single nation, but rather a group of nations.
The European System of Central Banks includes the ECB and all the national
central banks of EU member states whether or not they have adopted the
Euro.
According to EU treaty, the basic tasks of the Eurosystem are, among others:
• to maintain price stability;
• to define and implement monetary policy;
• to conduct foreign exchange operations;
• to promote the smooth operation of payment systems;
• to manage foreign reserves of the Eurozone countries.

22. A Deposit Account usually pays
interest and it may be necessary to
give advance warning before
withdrawing funds. Bank deposits
consist of money placed into
banking institutions
for safekeeping.

23. This is used by companies for the day-to-day financial transactions of making and
receiving payments.
• Payments can be made by withdrawing cash from a branch or a cash machine
or by writing a cheque, although these have mainly been replaced by more
efficient and quicker automatic payments or credit and debit cards.
• Direct debits are when the bank is authorised to take payment directly from the
account to pay bills such as utility bills.
• Standing orders are similar but are fixed, regular payments.
• A company can also give instructions for a credit or bank transfer which is when
payments are made directly to another current account, for example, to pay a
supplier. The company can also receive payments in this way.

24. A Savings Account is an interest-
bearing deposit account held at a bank
that provides a modest interest rate.
Banks may limit the number of
withdrawals you can make from your
savings account each month, and they
may charge fees unless you maintain a
certain average monthly balance in the
account.

25. Checking Accounts allow you to
write checks and use electronic debit
to access your funds, and checking
accounts typically do not have limits
on the number of withdrawals or
transactions you may make each
month.

26. Internet Banking allows private
customers and businesses to
manage their bank accounts and
carry out traditional banking
operations like checking bank
statements, paying bills and
transferring funds online. It is also
possible to have access to other
services such as loan applications,
financial products and stock
market investments.

27. Mobile banking is when a bank
account, credit card or other
financial account can be accessed
using a smartphone or similar
device.
This can be via internet access to a
bank’s home page, text messaging
or by using one of the many apps
from banks for handling various
financial transactions.

28. A Certificate of Deposit is a
savings certificate with a fixed
maturity date, specified fixed
interest rate and can be issued
in any denomination aside
from minimum investment
requirements.

29. A Loan is the act of giving money,
property or other material goods to
another party in exchange for future
repayment of the principal amount
along with interest or other finance
charges. A loan may be for a specific,
one-time amount or can be available
as an open-ended line of credit up to a
specified limit or ceiling amount.

30. A Mortgage is a loan taken to
finance the purchase of a house or
real estate. This loan is usually
obtained from banks, mortgage
companies, or other private sellers.
The home and/or land is kept as
collateral for the loan, which means
that the lender has a legal claim
over it in case of default of loan.

31.  FIXED - RATE MORTGAGES
(FRM)
 ADJUSTABLE -RATE
MORTGAGES (ARM)
 INTEREST ONLY MORTGAGES
(IOM)
 BALLON LOAN
 TWE STEP MORTGAGES

32. Insurance is the way in
which people and
businesses protect
themselves against risks.

33. Employers’ liability insurance: This
insures all company employees against
injury, disease or death as a result of their
employment, workplace conditions or
practices.
Motor insurance: This is compulsory if
the company owns and operates any kind
of vehicle on public roads.

34. Protection against loss or damage is important for a company to protect both its
property and its trade from damage and loss, so there are many policies for this area
including:
• buildings and contents insurance against fire, lightning, explosion, floods,
etc;
• cover against electrical and mechanical breakdown of machinery, including
computers;
• contents insurance against theft, which can also include a money policy to
cover cash, cheques, postage stamps and other negotiable documents;
• insurance of goods in transit;
• cover against business interruption and loss of
income;
• trade credit cover, which may be particularly important for exporters and
covers bad debt due to default and insolvency;
• legal expenses insurance.

35. A business has legal responsibilities towards its employees, the public
and customers. In addition to the compulsory Employers’ Liability
insurance, a company can take out insurance for:
• public liability which covers its legal liabilities for death or injury to
people and damage to property arising from its business activities;
• product liability which covers damage or injury arising from defects
in product design and manufacture.

36. The temporary or permanent loss of a key person in a business – due to
illness, injury or death – can have a significant effect on a business, so there
are polices which can help reduce this impact. These include:
• personal accident and sickness insurance, particularly important for
small companies and the self-employed;
• income protection insurance;
• private medical insurance;
• life insurance and pensions.

37. Investment funds are investment
products created with the sole
purpose of gathering investors'
capital, and investing that capital
collectively through a portfolio of
financial instruments such as
stocks, bonds and other
securities.

38. Video