All banks are business organizations, usually limited companies that seek to earn profits for their owners. Banks are commercial enterprises, which gradually evolved from the old goldsmith establishments in which money and valuables were stored. So the provision of a safe deposit for money and valuables is the oldest and the most important banking function. Another earliest function is the issuing of bank-notes. In addition they move money from one place to another and trade in currency. The most profitable banking activity is lending of money. It is the major source of bank income.
Banks are different in different countries. There are many kinds of banks: commercial, saving, national, export – import banks and others. Major commercial banks in such cities as Tokyo, Paris, Rio cooperate with each other. In this way they finance imports and exports between countries.
Banks provide a wide range of financial services and different types of accounts. For example personal chequing account is used by individuals to pay for their personal expenses. The customers receive a cheque-book and the bank keeps the record of the bank balance. No interest is paid on a personal chequing account balance.
If you want to have some interest on the money in the bank you should use saving accounts. Then the customer is given a passbook in which all banking operations are entered.
A central bank stands at the apex and is responsible for the operation of the banking system.
III. Do the following exercises: