Lesson Objectives All students will understand Most students will The role of banks in our economy Most students will Understand the importance of credit Some students will Understand the complexities of interest rates and their impact on the economy Progress Arrow

The role of banks Discussion points pg 73 Banks take deposits from individuals and businesses that wish to save (savings accounts) Banks take deposits from individuals and businesses that wish to keep their money safe and manage their outgoings (current accounts) Banks lend money to individuals and businesses Banks operate on a large scale and rely on the fact that not all of their customers will want to withdraw their money at the same time

Providing credit Credit – if managed well – is considered an important process and good for our economy It enables Businesses to start up Businesses to expand Construction projects Individuals to make expensive purchases like houses and cars It would not be so great if a loan was required to cover the working capital of a business – the finance needed for the day-to-day running of the business

Bank loans Bank loans will of course have to be paid back with interest, which is basically the charge of the loan (the price of the loan) The interest rate charged in normally bespoke to the loan and will depend on Risk associated with the loan, which is also linked to the collateral – what the loan is secured against e.g. a property Reason for loan Length of the loan

Task “More Magic” pg 76

Banking regulation Since the financial crisis of 2008, most governments have regulated their banks to ensure the catastrophic bank failures are not repeated. This had made many loans more difficult to obtain – “credit crunch” But confidence in the banks has grown again

Task Computer task – “Find out” pg 76