Money Management

A bank is a company that works with the money that people give it. If you give your money to a bank, it not only protects it but pays you interest so that it can work with the money. This is one of the reasons why people save their money in a bank. Money may also be safer there than at home. What is Banking?

Interest is the extra money that you must pay back when you borrow money. Interest rate is the percentage that banks give to savers when they leave their money in a bank. It is also the rate they charge customers for borrowing money What is Banking?

Banks make a profit by charging fees and charging interest on loans Some fees include NSF Fees Minimum Account Balance Fees Service Charge Loan Fees Banks profit

Investment Banks Commercial Banks Development Banks Central Banks Online Banks Savings and Loans Types of Banks

Investment Banks Help organizations and large companies raise money on the international financial markets Commercial Banks Most important banks Services Include Accounts and loans Open to businesses and general public Types of Banks Continued

Development Banks Help Third World Countries Send Aid Workers Offer Technical Help Central Banks Manage a countries banking system Examples: The Federal Reserve, European Central Bank, Bank of England Types of Banks Continued

Online Banks Provide Higher Interest Rates Do not have overhead and fees of Brick and Mortar Banks Easy to access Savings and Loans Specialize in financing Houses Mortgage= loan to purchase a home Types of Banks Continued

Internet Banking Debit Cards Savings accounts Loans ATMS Stocks Bonds Credit Cards CD’s And more Services Offered

History The Central Bank of The United States is named the Federal Reserve The European Central Bank is responsible for the distribution and value of the Euro More Commonly known as The Fed The worlds largest banks are located in Europe, USA, Japan

Italy was the center of banking during the middle Ages. Jewish trades emerges as the first bankers and became very successful. The Medici family dominated Florence for over two centuries. They set up Europe’s largest bank in the 15 th century. History

A set of agreements set by the Basel Committee on Bank Supervision (BCBS), which provides recommendations on banking regulations in regards to capital risk, market risk and operational risk. The purpose of the accords is to ensure that financial institutions have enough capital on account to meet obligations and absorb unexpected losses. Basel Accord

The first Basel Accord, known as Basel I, was issued in 1988 and focuses on the capital adequacy of financial institutions. The capital adequacy risk, (the risk that a financial institution will be hurt by an unexpected loss), categorizes the assets of financial institution into five risk categories (0%, 10%, 20%, 50%, 100%). Banks that operate internationally are required to have a risk weight of 8% or less. Accord I

The second Basel Accord, known as Basel II, is to be fully implemented by It focuses on three main areas, including minimum capital requirements, supervisory review and market discipline, which are known as the three pillars. The focus of this accord is to strengthen international banking requirements as well as to supervise and enforce these requirements. Accord II Banking is not bound by boarders of countries.

In 1929 the first world wide banking crises began. During, The Great Depression many people lost their jobs, savings, and homes. Many banks went out of business or began bankrupt. Many depositors rushed banks in an attempt to withdraw their money. Great Depression

In 1933 Franklin D. Roosevelt signed a bill in which the government guaranteed the savings of depositors if the bank went out of business (Creating the FDIC) FDR

Today The 2008 banking crisis hit in America first and the spread throughout the world. Banks gave home owners mortgages without checking the financial back grounds. Housing prices dropped and banks began to loss money.