1. Money and Banks

2. What is money? Economists say: Throughout history:
Money is anything people are willing to accept in exchange for goods or services.
Throughout history:
Salt, animal hides, gems, and tobacco have been used.

3. 3 Functions of Money… Medium or form of exchange
We trade money for goods and services
Without money we would have to barter
Serves as a store of value
We hold our wealth in the form of money until we use it
Serves as a measure of value
Money assigns value to a good or service

4. Types of Money Coins Currency The metal form of money like the penny!
paper money and coins

5. Why does money work?
It works because we accept that they have value. We know others will accept it.

6. The Financial System Commercial Banks
offer full banking services such as checking & savings accounts, loans, lines of credit, Certificates of Deposits, etc.
have a large influence on financial industry
Examples:

7. The Financial System Savings and Loan Associations
Traditionally used for home loans
Accept deposits and issue savings accounts
Usually found in smaller towns

8. The Financial System Credit Unions Not for profit
Must be a member to use
Certain business, labor unions and governments have credit unions
Usually have lower fees and interest rates
Examples: Teacher Federal Credit Union
Anoka Hennepin Credit Union

9. How do banks make money? You deposit money in a bank
The bank uses some of that money to make loans to other customers
The bank charges interest (a fee to use the money) on the loan

10. Safeguarding Our Financial System
As a result of the financial collapse of the 1920’s, our financial system is regulated and insured to protect consumers.
Banks are required to report to one or more regulatory agencies
Banks must follow rules and accounting practices that minimize risk

11. Safeguarding Our Financial System
FDIC (Federal Deposit Insurance Corporation)
created in 1933
government agency
protects consumers deposits (up to $250,000) when a bank fails
It used to be $100,000 but the raised the protection

12. Why don’t they just print more money?!?!