1. Understanding Money and Banking
Chapter 14
Understanding Money and Banking
PowerPoint Presentation by Charlie Cook
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2. Key Topics Money and its forms in the U.S. U.S. financial institutions
How banks create money and how they are regulated
The Federal Reserve system
Changes in the financial industry
International banking and finance
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3. What Is Money? Portability Divisibility Durability Stability
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4. The Functions of Money Medium of Exchange Store of Value
Unit of Account
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5. The Money Supply M1: Spendable M2: Spendable plus Convertible Currency
Demand deposits
M2: Spendable plus Convertible
Time deposits
Money market mutual funds
Savings deposit
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6. Credit Cards: A Major Financial Force
Credit cards accounted for almost half of all transactions for the year 2000
Credit cards are a large and growing business
Convenient for users
Highly profitable for issuers
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7. U.S. Financial Institutions
Commercial Banks
Diversification and mergers
Commercial interest rates
Savings and Loan Associations
Mutual Savings Banks
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8. U.S. Financial Institutions
Credit Unions
Non-Deposit Institutions
Pension funds
Insurance companies
Finance companies
Securities investment dealers
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9. Special Financial Services
Individual Retirement Accounts (IRAS)
Trust Services
International Services
Currency exchange
Letters of credit
Banker’s acceptance
Financial advice and brokerage services
Automated teller machines
Electronic funds transfer
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10. The Federal Reserve System
Structure
Board of governors
Reserve banks
Member banks
Functions
Banking for the government
Banking for banks
Controlling the money supply
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11. Controlling the Money Supply: The Tools of the Fed
Reserve requirements
Discount rate controls
Open market operations
Selective credit controls
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12. The Changing Money and Banking System
Interstate Banking
Deregulation
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13. Electronic Technologies: A Dramatic Change
Debit Cards
Smart Cards
E-cash
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14. Bolstering International Trade
World Bank
Provides a limited scope of financial services
International Monetary Fund (IMF)
Stable exchange rates
Temporary short-term loans
Cooperation on global monetary issues
International payments system
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15. Chapter Review Define money and its forms in the U.S.
Describe U.S. financial institutions.
Explain how banks create money and how they are regulated.
Discuss the functions and tools of the Federal Reserve system.
Identify how the financial industry is changing.
Understand international banking and finance.
Copyright © 2005 Prentice Hall, Inc. All rights reserved.