1. 元
MONEY & BANKING
Currency Converter

2. Money What would we do without it? Basic Functions of money
Medium of exchange
Standard of value for goods/services
Store of value (savings)

3. Characteristics of Money
Currency – coins and/or paper used as money in an economy
Other forms of money used in the past???

4. Characteristics of Money
Generally accepted
Counted and measured accurately
Durable & not easily destroyed
Convenient to use and easy to carry
Inexpensive to produce
Supply of our money is
easily controlled

5. Why Does Money Have Value?
Activity
Why Does Money Have Value?
Bitcoins

6. Banking & the Federal Reserve System

7. How & Where Banking Began…
Ancient Mesopotamia -- royal palaces and temples provided secure places for the safe-keeping of grain and other commodities.
Receipts came to be used for transfers.
Eventually private houses in Mesopotamia also got involved in these banking operations and laws regulating them were included in the code of Hammurabi.
Re-emerged in Europe at about the time of the Crusades.
The need to transfer sums of money for trading purposes led to the development of financial services including bills of exchange.
The Crusades gave a great stimulus to banking because payments for supplies, equipment, allies, ransoms etc. required safe and speedy means of transferring vast resources of cash.

8. Bank Services Demand Deposits Savings Accounts
Checking Account
A bank account that the account holder can draw checks against without giving prior notice or having a passbook.
Traveler’s Checks
Savings Accounts
Loans – largest source of revenue for banks

9. Other Financial Institutions
Savings & Loan Associations
used for???
Offer other services
Mutual Savings Bank –
owned by individual investors
Profit shared
Credit Union
Non-profit
Members come from an organization/institution

10. Banking now…

11. The Federal Reserve System… a clip
What is it??
When did it start??
Why do we
need it??
What does
it do?

12. Federal Reserve System
Late 1800’s & Early 1900’s – widespread hardship
People began to draw money out of the banks – they feared the banks would go out of business
Banks operated on fractional reserve principle, many did not have enough money on hand to meet the demand

13. 1913 Federal Reserve Act
Way for federal government to assist banks, when needed
Regulates the activities of banks
Provides services for banks

14. Federal Reserve Districts
By dividing into districts, each central bank can stay in touch with the needs of its district – since economic problems can differ from region to region.

15. Functions of the “Fed” 1. Providing Services 2. Government’s Bank
Collect & clear checks
Supplies currency to banks
2. Government’s Bank
Keeping the federal government’s checking accounts
Keeps track of the government’s debt

16. Functions of the “Fed” 3. Regulating Banks
Sets Minimum amount of reserves a bank must keep on hand
Enforce laws dealing with banks/finances
4. Making Loans to Banks
When customers want to borrow/withdraw large sums of money, the Fed will make loans to help the banks do this

17. Functions of the “Fed” 5. Controlling the Money Supply
(The most IMPORTANT JOB)
Regulate the nation’s supply of money
3 Different Methods:
1)Change reserve requirements
2) Change the discount rate
3) Buy & Sell government bonds

18. A slowdown of economic activity and production!
Inflation
&
Recession
A general rise in the prices of goods and services throughout the economy!
A slowdown of economic activity and production!

19. Banking and Capitalism