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Topic 3 : Banking Law and Regulations, Governing the conventional finance…
Topic 3 : Banking Law and Regulations
Bank regulations
Purpose
1.Protect depositors
2.Provide stable framework for making payments
3.Provide quality services at competitive prices
4.Protect consumer interests
Benefits
Implementation of policy
Safety
Credit Control
Safeness
Confidence
Drawbacks
Less profit
Failure
Costly
Time consuming
Free Banking
Characteristics
Freedom to choose
Freedom to establish
Freedom to offer financial services
Freedom to have coins minted/ issue
own-brand payment instruments
Benefits
Politically or Economically emancipated/ untied
Money and state strictly separated
No inflation/ deflation
IMF and World Bank not exist
Problem affect the Stability
Unanticipated revaluation of long-term debts
Monetary disequilibrium
Disturbance by bank panics/ runs
Bank Negara
1.Promotes financial stability
2.Formulates monetary policy
3.Advise government on macroeconomic policy
4.Issue currency
5.Regulates financial institution
6.Oversee payment system/money/ foreign exchange market
Banking System in Malaysia
Conventional Banking System
Islamic Banking System
Governing the conventional finance sector
Governing the Islamic finance sector