Chapter Twenty-Six: Money, Banking, and Finance. What is Money?

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Presentation transcript:

Chapter Twenty-Six: Money, Banking, and Finance

What is Money?

CurrencyReal Estate Checking Account Share of Stock Precious Metal More Liquid Less Liquid Liquidity Continuum Figure 26.1: The Liquidity Continuum

The Banking System

Table 26.1: A Simplified Balance Sheet of a Private Bank

Table 26.2: Bank Types Chief Functions RetailSafekeeping of money; checking accounts; loans CommercialSimilar to retail bank but more diverse clients including businesses Savings and LoanSimilar to retail bank but specializing in loans, particularly mortgages Credit UnionSame as a retail bank, but cooperatively owned by customers Private Caters almost exclusively to high net worth individuals; functions extend beyond traditional banking into variety of financial services Investment No traditional banking functions; involved in underwriting and issuing securities, assistance with company mergers and acquisitions, market making, and general advice to corporations Central Overseeing the monetary and interest rate stability of the national economy by directly influencing the money supply