1. Money And Banking BE220
Ahmed Alharbi

2. Structure of a Financial System
The financial system is complex, comprising different financial institutions such as:
Banks
Insurance companies
Mutual funds
Finance companies
Investment banks
Financial intermediaries
Pension funds

3. Banks And Other Financial Institutions
Banks: financial institutions that accept deposits and make loans.
Examples:
Commercial banks
Mutual savings banks
Credit unions
Insurance companies
Pension funds

4. Banks are the largest financial institutions.
An individuals approaches a bank when he/she needs a loan to buy a house or a car.

5. Financial Innovation E-finance
Financial services are delivered electronically.
No need to see a human teller.
Examples
ATM’s
Net banking
Phone banking

6. Money and Business Cycle
Aggregate Output: total production of goods and services.
Unemployment rates: the percentage of available unemployed labor force.
Business Cycle: the upward and downward movement of aggregate output produced in the economy.
Recession: periods of declining aggregate output.
Monetary Theory: changes in the quantities of money positively affect changes in aggregate economic activity and the price level.

7. Money and Inflation
Aggregate price level: the average price of goods and services in an economy.
Inflation: a continual increase in the price level affecting individuals, businesses and government.

8. Money and Interest Rates
There is a positive relationship between the interest rates in long-term Treasury bonds and the rate of money growth.

9. Fiscal Policy and Monetary Policy
Fiscal Policy: involves decisions about government spending and taxation.
Monetary Policy: management of money and interest rate.
Central Banks: responsible for the conduct of a nation’s monetary policy.

10. Fiscal Policy and Monetary Policy
Budget deficit
Budget surplus
Gross Domestic Product (GDP).

11. Meaning of Money
Currency
Wealth
Income

12. Thank You

13. Functions of Money
Medium of Exchange
Units of Account
Store of Value

14. Evolution of Payment System
Commodity Money
Fiat Money
Checks
Electronic Payments