The document discusses the functions of commercial banks and central banks. It summarizes that commercial banks primarily accept deposits and provide loans and advances. Central banks issue currency, keep reserves, safeguard currency value, act as a banker to the government and other banks, and promote monetary stability. Both commercial banks and central banks provide other banking services and facilities.

1. PREPARED BY :
NUR AMIRA BINTI MD LAZI
30DLS12F1030

2. •- must be able
Divisibility •easy to use and small to Acceptability Uniformity
carry around •fulfil its various
withstand being function
using repeatly • money can easily •can accept for public •money must be same
divide to smaller units must be able to use value and uniform
of value the money for quality
transaction
Durability Portability Stability of
value

3. Unit of account - Standard of
Medium of
money is Store of value - deffered
exchange -
common enable to people payment - many
money can
standard to to buy and sell contracts
used for
measuring good or services in promise to pay
buying and
relative worth different times and fixed sum of
selling good or
good and places. money well in the
services.
services. future

4. Commodity
• Has own value that used for payment
money
• Anything that government has declare to be money
Fiat money • Issued by central bank a country
• Paper money that government approved to settle of
Legal tender payment
• Has a lower metallic than face value..
Token
money
• Coin 5sen.10 sen,20 sen,50 sen
• By cheques
Demand
deposits
• Known as bank deposits or current accounts.

5. • People hold money to buy goods or service
Transaction • As income rise
• Money demand increase
motive
• To keep extra money in case unforeseen
Precautionary situations requires a capital outlay
motive
• store wealth as money or bonds
Speculative • Interest rate high,bonds more attractive
and hold less money
motive • Money demand negatively related to
interest rate

6. M1 :Narrow money – • Currency – coins and paper money issued by Bank Negara
Transaction money or Malaysia (Fiat money)
money which can be • Checkable deposits – account balance kept in commercial
directly used for banks (demand deposits)
transaction • M1= CURRENCY + CHECKABLE DEPOSITS
M2:Near money plus
M1 - A broader • M2= M1 + SAVINGS AND FIXED DEPOSITS IN
COMMERCIALS BANKS + NCD + REPO + BNM
definition of the supply CERTIFICATE
of money and consists • NEAR MONEY (QUASI MONEY) =M2 – M1
of M1 and near money
M3 : Broad money –
• M3 = M2 + SAVINGS AND FIXED DEPOSITES IN OTHER
Measure of money BANKING INSTITUTIONS
supply which is the • BROAD NEAR MONEY (QUASI MONEY) = M3 – M1
broadest in definition

7. Banking institutions
Central bank – Owned by government (Bank Negara Commercial banks – Primary financial that most people
Malaysia) keep their money (Public Bank Bhd )
Non-bank financial institution
Islamic bank - Baased on syariah Merchant bank – Not accept Discount house- Short term loans in
principle.Dont have interest ( deposites from public (Affin financial market (Affin descount
Islamic Bank) Merchant Bank Berhd) Bank berhad)
Non-bank financial intermediaries
Development financial institutions – Government Employees provident fund – Benefit to
promote investment in the industrial and agriculture employees,constribute certain percentage the income
sectors because provide firm or farmers make a loans. EPF each month

8. Accepting
deposits
Function of
commercial
Providing Banks
other Providing
banking loans and
services and advances
facilities

9. To issue currency
and keep reserves
safeguarding the
value of the
currency
To act as a
Be a holder of the
banker and
country’s stock of
gold and foreign
Function financial adviser
to the
currency reserves
of central government
bank
To promote
monetary
To be banker to
stability and a
other banks
financial
structure