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Financial Institutions - Coggle Diagram

- - - - money is a standard way of payment, so we don't have to trade items for another, and pay for the item we buy easily
    - - money lets us measure the worth of an item/product
    - - it is something relatively safe to keep the worth compared to items/products
    - - we can make transactions using money to buy products
  - - - liquid assets
        
        items or products that can easily be sold
    - - cash
      - coins
      - bank
      - mortgage
      - etc
  - - - it needs to be accepted to be worth something
    - - it must be durable, if it isn't, it will be time-limited and will be gone soon
    - - it must be scarce to be worth something
    - - it must be able to be divided, so the money we exchange will be the perfect amount needed, as many products may not be the same worth as the money/note we have
    - - should be able to easily be carried around, so transactions can be more liquid
- - - - Issuing notes and coins
        
        Central bank has rights to print and issue new notes and coins to replace old/worn out ones in their respective country
      - Managing national debt
        
        Issues and repays debt from the public representing the government
      - Regulating financial statements
        
        Make rules so other banks will stay healthy
        
        Determine while organisations should be banks
        
        Holds deposit of other banks
        
        transfer funds between their account to settle cheques, debit card, and other payments
      - Managing gold & foreign currency reserves
        
        They manage gold and reserves to keep the value of the nation's currency stabilised or away from going down
      - Operating the government monetary policy
        
        use monetary policy to cause price inflation
        
        use monetary policy to influence price inflation, employment and growth of ecnomy
        
        raising price inflation is used to influence the reduction of buying a product
        
        raising interest in the economy
        
        makes borrowing money more expensive,
        
        reduces demands for loans
        
        increase in demand for savings
        
        charges banking system in the economy when it loans money
        
        government finance minister usually manage monetary policy, but central bank can set some interest rate without political interference
        
        change of interest rate influences:
        
        spending by consumers
        
        saving
        
        borrowing
      - Manages payments from and to the government
        
        Holds government taxes and revenues
        
        Government's account is used to pay for their government expenses
      - Lender of Last Resort
        
        They prevent banks from being bankrupt by lending money when banks face difficulty
  - - - Deposits & savings account
      - Loans
      - Buy & sharing sales
      - Providing insurance
      - Forex
      - pension funds
      - financial and tax planning advice
    - - High-street banks
        
        branches located in most cities and towns
      - Clearing banks
        
        banks transfers funds between each other on behalf of the customer
    - - telephone
      - online banking