Bank

Wypedzenie

Bank of England Charter sealing 1694

Pohjoismaiden Osakepankin Helsingin sivukonttori.jpg

Banco de Venezuela, Coro

Bank.Pokhara

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Financial institution that accepts deposits and creates credit

Bank

Type	Financial institution
Industry	Financial services
Products	Loans, credit cards, savings accounts, checking accounts, mortgages, investment services

A bank is a financial institution that accepts deposits from the public and creates credit. Lending activities can be performed either directly or indirectly through capital markets. Due to their importance in the financial stability of a country, banks are highly regulated in most countries. Most nations have institutionalized a system known as fractional reserve banking, under which banks hold liquid assets equal to only a portion of their current liabilities. In addition to other regulations intended to ensure liquidity, banks are generally subject to minimum capital requirements based on an international set of capital standards, known as the Basel Accords.

History

The history of banking can be traced back to ancient times, with the earliest known banks being the temples of the ancient world, which provided safe places for the storage of valuables. The development of banking spread from medieval and Renaissance Italy, particularly the rich cities of Florence, Venice, and Genoa. The Bardi and Peruzzi families dominated banking in 14th-century Florence, establishing branches in many other parts of Europe. The most famous Italian bank was the Medici Bank, established by Giovanni di Bicci de' Medici in 1397.

Types of Banks

Banks can be classified into several types based on their functions and the services they provide:

• Retail banks: These banks provide services to individual consumers rather than businesses. Services offered include savings and checking accounts, mortgages, personal loans, debit/credit cards, and certificates of deposit (CDs).
• Commercial banks: These banks provide services to businesses and corporations. Services include business loans, asset management, and treasury services.
• Investment banks: These banks specialize in large and complex financial transactions such as underwriting, acting as an intermediary between a securities issuer and the investing public, facilitating mergers and acquisitions, and providing advisory services.
• Central banks: These banks manage the currency, money supply, and interest rates of a state or formal monetary union. They oversee the commercial banking system of their respective countries. Examples include the Federal Reserve in the United States and the European Central Bank.

Functions of Banks

Banks perform several key functions, including:

• Accepting deposits: Banks provide a safe place for individuals and businesses to deposit their money.
• Providing loans: Banks lend money to individuals and businesses for various purposes, such as buying a home, starting a business, or funding education.
• Payment and settlement services: Banks facilitate the transfer of funds between individuals and businesses through various payment systems.
• Wealth management: Banks offer investment and wealth management services to help individuals and businesses grow their assets.
• Currency exchange: Banks provide currency exchange services for individuals and businesses engaged in international trade.

Regulation

Banks are subject to a wide range of regulations designed to ensure their stability and protect consumers. These regulations include:

• Capital requirements: Banks must hold a certain amount of capital to absorb potential losses and protect depositors.
• Liquidity requirements: Banks must maintain a certain level of liquid assets to meet short-term obligations.
• Consumer protection laws: Banks must comply with laws designed to protect consumers from unfair or deceptive practices.

See also

• Banking
• Financial services
• Credit union
• Savings and loan association
• Basel Accords
• Fractional reserve banking
• Monetary policy