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Money & Banking (Types of Banks (Small & medium scale (SME) Bank,…

- - - - Financing of projects
      - Tell revenue generation schemes to entrepreneurs.
      - Promote the business
- - - - Definition
        
        Money
        
        Is anything that serves as a means of payment or method of settling debts.
        
        Fiat Money
        
        Anything which serves as a means of payment by government declaration but has no intrinsic value.
    - - The Functions
        
        A medium of exchange
        
        Money is exchanged for products.
        
        A unit of account / Standard of value
        
        We use the money to compare the values of commodities.
        
        A store of value
        
        An item that people can use to transfer purchasing power from the present to the future.
        
        Creator of wealth
        
        Money makes it easier to accumulate wealth.
        
        Means of deferred payment
        
        Borrow money and pay it back over a relatively long period of time
  - - - Commodity money
        
        Takes the form of a commodity with intrinsic value.
      - Flat money
        
        Used as money because of government decree.
        
        It does not have intrinsic value.
      - Currency
        
        Is the paper bills & coins in the hands of the public.
      - Demand deposits
        
        Balances in bank accounts that depositors can access on demand by writing a check.
  - - - Portability
        
        Can be carried around easily (in wallet or pocket)
      - Durability
        
        Must be able to stand the test of time without disintegrating. :
      - Divisibility
        
        Be able to divide into smaller units to enable a wide range of transaction
      - Recognisability
        
        Not easily copied (forged)
      - Acceptability
        
        The legal status of money is given as legal tender by government.
      - Relative scarcity
        
        An increase in the money supply can lead to a fall in its value.
- - - - Reserve Bank
      - Monetary Authority
        
        Setting of the money supply by policymakers in the central bank
        
        Money supply refers to the quantity of money available in the economy
        
        The primary way in which the central bank changes the money supply s through open-market operations.
        The central bank purchases and sells government bonds.
        
        To increase the money supply, the central bank buys government bonds from the public.
        
        To decrease the money supply, the central bank sells government bonds to the public.
      - Functions of Central Bank
        
        Regulates banks To ensure they follow federal laws intended to promote safe & sound banking practices.
        
        Acts as banker bank Making loans to banks, controlling loan interest rates & as a lender of last resort to the banking sector during times of financial crisis