The bulk of all money transactions today involve the transfer of bank deposits. Depository institutions, which we normally call banks, are at the very center of our monetary system. Thus a basic knowledge of the banking system is essential to an understanding of how money works.
Bank Deposits and Reserves
The monetary base is created by the Fed when it buys securities for its own portfolio. Bank deposits themselves are not base money, rather they are claims on base money. A bank must hold reserves of base money in order to meet its depositors' cash withdrawals and to cover the checks written against their accounts. Reserves comprise a bank's vault cash and what it holds on deposit at the Fed, known as Fed funds. The Fed requires banks to maintain reserves of at least 10% of their demand deposits, averaged over successive 14-day periods.
The Movement of Bank Reserves
When a depositor writes a check against his account, his bank must surrender that amount in reserves to the payee's bank for the check to clear. Reserves are constantly moving from one bank to another as checks are written and cleared. At the end of the day, some banks will be short of reserves and others long. Banks redistribute reserves among themselves by trading in the Fed funds market. Those long on reserves will normally lend to those short. The annualized interest rate on interbank loans is known as the Fed funds rate, and varies with supply and demand.
The reserve requirement applies only to the bank's demand deposits, not its term or savings deposits. Thus when a bank depositor converts funds in a demand deposit into a term or savings deposit, he frees up the reserves that were held against the demand deposit. The bank can then use those reserves in several ways. For example, it can hold them to back further lending, buy interest-earning Treasury securities, or lend them to other banks in the Fed funds market.
its so hard to define....
National Electronic Clearing System
You can define a system as part of the universe on which you focus your attention. The surroundings include everything else in the universe. In thermochemical experiments, you can consider the region in the immediate vicinity of the system as the surroundings. A major goal of thermochemistry is to examine the flow of heat between the system and its surroundings.
i'm not sure
is the process of every thng
modern banking
Modern banking system has been able to incorporate technology into the banking industry. This is what has made online and mobile banking possible.
define modern education system
The Federal Reserve Act is the law that created the modern banking system. The law was signed on December 23, 1913 by the 28th President Woodrow Wilson.
They are supposed to have invented the banking system.
here is c code for banking system.... #include <stdio.h> #include <stdlib.h> #include <conio.h> #include <dos.h> #include<string.h> #include <graphics.h> #define LEN 100 /*====================================================================*/
1. The whole banking system was thrown into confusion. 2. The more complex the banking system, the more difficult it is to do this. 3. A sound banking system matched to new banking needs. 4. The international banking system began to crack. 5. The regulatory structure for the banking system is almost entirely pro-cyclical.
Rollin George Thomas has written: 'Our modern banking and monetary system' -- subject(s): Banks and banking, Currency question, Money
how is universal banking system operted/
he closed all banks and only reopened those with enough money
What is Home Banking
entity relationship diagram on banking system?