chapter 15-money and banking

what is a commercial bank

financial institution that accepts deposits and provides loans to individuals and firms

what do commercial banks do

accept deposits, provide loans, provide overdrafts, facilitate payments, provide financial aid/services

what is a central bank

a bank responsible for managing a country’s monetary system and overseeing the bank system

functions of a central bank

banker to the government, banker to commercial banks, lender of last resort, issue bank notes

functions of money

measure of value, store of value, medium of exchange, standard of deferred payment

secondary functions of commercial banks

collecting and clearing cheques on behalf of clients, offering addition financial services, providing money transfer facilities, offering credit card facilities for the convenience, offering internet banking facilities