Money and Banking

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Money and Banking by Mind Map: Money and Banking

1. Central

2. Characteristics of Money

2.1. Portability: It must be easy to carry

2.2. Uniformly: To be a measure of value all bills with the same value need to be exactly the same.

2.3. Durability: It needs to last for a long period of time in order to maintain it’s Value.

2.4. Acceptability: It must be valued and widely recognised as a legal means of payment for goods and services

2.5. Divisibility: To be valued as a medium of exchange it must be easily divisible. $100 bills can easily be exchanged with $20 or $50

2.6. Uniformly: To be a measure of value all bills with the same value need to be exactly the same

2.7. Scarcity: An oversupply of money would make it worthless. There needs to be a limited supply in order to maintain value

3. Characteristics

4. Commercial

5. Forms

6. Functions

7. Banking

7.1. Banks • Banks are the main types of financial institution in the market for money • A bank is a financial intermediary because it brings together customers who want to save money and customers who want to borrow money.

8. Roles : • Managing the creation and distribution of currency • Regulating commercial banks to ensure that the poducts they provide contribute to a healthy economy • Setting the interest rate in an economy • Facilitates all payments between banks • Lender of last resort to commercial banks • Managing the exchange rate of a nation's currency • Monitor corrupt money flows with other central banks in the global financial system.

9. Roles : • Accepting deposits • Current accounts • Making loans • Creating credit

10. Functions : • Money is a medium of exchange • Money is unit of account • Money is a store of value • Money is a mean of deferred payment

11. Importance

12. Why do we need money : To support specialization and exchange. For example a man selling clothes would need food to survive but the street vendor would not want to trade their food for clothes because they have enough. Money is a form of exchange that can help this. If the man manages to sell his clothes for $5 he will be able to trade that money for food and then the street vendor will have something to trade to with that he wants or needs.

13. Different forms of money: Gold Paper money Coins Copper Precious stones Silver