Saturday, November 26, 2022

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What Is The Function Of Banks?

The origin of banks date back to the times of the Knights Templers and the crusades. While banks of today offer a number of different services their underlying purpose and function remains the same i.e. to gather, invest and transfer money across borders. There are however various types of banks including investment banks, and consumer banks.

Central Bank
While the central bank may be a feature of the American banking system it does exist in other countries that primarily refer to them as National Banks. The central bank is responsible for regulating other private and government banks that cater to the individual consumer as well as to businesses. The central bank also governs things such as interest rates which directly affects inflation and the value of the dollar in the international market along with other factors.

The World Bank
The World Bank is an international bank which functions similar to the bank down the street except for it lends money and invests in countries. Transactions worth billions and even trillions of dollars are made every second by the World Bank. This bank will often assist underdeveloped countries and developing countries acquire capital to build their infrastructure. Countries which have been hit by a national disaster but do not have the means to rebuild may also apply for a loan from the World Bank which will then expect that the amount be returned with a certain percentage of interest.

The flow of currency
Banks regardless of their size are responsible for the flow of currency both within as well as across international borders. Banks today make it possible for people to transfer money thousands of miles in mere seconds, thanks to innovative banking procedures and the latest in information technology. This is something which wasnt possible even 20 years from today.

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