1. Money and the Banking System
Holt Economics
4/23/2017
CHAPTER 13
Money and the Banking System
SECTION 1: Money
SECTION 2: History of U.S. Banking
SECTION 3: U.S. Banking Today
Chapter 13

2. Objectives: Money SECTION 1 What functions does money serve?
What characteristics must an item have to be used as money?
What are the sources of money’s value?
What types of money are used in the United States?

3. Functions of money: Money SECTION 1 a medium of exchange
a store of value
a standard of value

4. Characteristics of money:
SECTION 1
Money
Characteristics of money:
durability
portability
divisibility
stability in value
acceptability

5. Sources of money’s value:
SECTION 1
Money
Sources of money’s value:
commodity money—when an item has a value of its own and is used as money
representative money—when an item can be exchanged for another item of equal value
fiat money—when an item has value because the government decrees it

6. Types of money used in the United States:
SECTION 1
Money
Types of money used in the United States:
coins
paper money
checks (demand deposits)
near money

7. Objectives: History of U.S. Banking SECTION 2
What were the views of Federalists and Antifederalists about U.S. banking?
How did the development in the 1860s of nationally chartered banks affect the power of state-chartered banks?
How did the government reform and regulate the banking system after World War I?

8. View of banking: History of U.S. Banking SECTION 2
Federalists—federal control over state banks
Antifederalists—state control over banks

9. SECTION 2
History of U.S. Banking
With the creation of nationally chartered banks, state-chartered banks weakened. Reasons included:
federal government now had power to charter national banks
banks required to hold silver and gold reserves
federal government issued a national currency that led to the elimination of state-bank currencies

10. Post-World War I banking reforms:
SECTION 2
History of U.S. Banking
Post-World War I banking reforms:
created the Federal Reserve System to centralize U.S. banking and passed the Banking Act of 1933 to protect deposits
enacted the Gold Reserve Act of 1934 to allow the government to buy all gold held by U.S. banks and remove the gold standard in the U.S.

11. Objectives: U.S. Banking Today SECTION 3
What are the most common types of U.S. financial institutions?
How has automation affected banking practices?
What were the results of banking deregulation?
What crises did financial institutions face in the late 1980s?

12. Common types of U.S. financial institutions:
SECTION 3
U.S. Banking Today
Common types of U.S. financial institutions:
commercial banks
savings and loan associations
mutual savings banks
credit unions

13. Effects of automation on banking:
SECTION 3
U.S. Banking Today
Effects of automation on banking:
increased banks’ efficiency
speeded up banking transactions
saved banks money by reducing the number of workers needed

14. Results of banking deregulation:
SECTION 3
U.S. Banking Today
Results of banking deregulation:
more competition
growth of regional banking

15. Problems financial institutions faced in the late 1980s:
SECTION 3
U.S. Banking Today
Problems financial institutions faced in the late 1980s:
loan defaults
bank failures
S&L crisis

16. Wrap-Up CHAPTER 13 1. What are the major functions of money?
2. Identify the types of money used in the United States.
3. Compare the views of Federalists and Antifederalists on banking.
4. How has the role of commercial banks changed over time?
5. How did the U.S. government work to regulate the banking industry during the 1900s?

17. CHAPTER 13
Wrap-Up
6. How has banking changed as a result of automation?
7. How did the U.S. government respond to the S&L crisis of the 1980s?