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Types of Banks
Central banking The Bank of England as the country's central bank plays the major role in controlling the British monetary system and it is at the hub of most banking activity. The Bank of England is controlled by a court of directors appointed by the state. This court consists of a governor, a deputy governor and sixteen directors. Functions of the Central Bank: It is the government's bank. It manages the government's banking accounts, for example for the Exchequer and other government departments. It advises the government on formulation of monetary policy and assists the government in carrying out the monetary policy. It handles the arrangements for government borrowing: short- term: through the sale of Treasury Bills, and long-term: management of government stocks It manages the exchange equalisation account and through this the Bank can influence the value of sterling by selling or buying pounds to affect foreign exchange market prices. It controls the note issue: The Bank has the sole responsibility for the issue of bank notes in England and Wales. It is the bankers' bank: Each of the clearing banks has an account with the Bank. The clearing banks keep about the half of their liquid reserves deposited at the Bank (short call money) and use these for settling debts among themselves. The commercial banks rely on the Bank if they run short of money or require loan. It has international responsibilities: The Bank provides services for other central banks and for example for the IMF. It is the lender of last resort: If the commercial banks run short of cash they recall deposits they have in the money market. This leaves the discount houses short of funds, but The Bank 'lends as last resort' to the discount houses at a higher rate of interest. Other banks and financial institutions: Discount houses: They accept very short-term deposits in return for a low rate of interest They use funds to purchase a variety of assets, e.g. treasury bills, bills of exchange and guilt-edged securities They provide immediate finance for companies by discounting reliable bills of exchange = they buy them for less then their face value and resell them and charge a higher rate of discount to achieve a profit Clearing banks: They accept deposits of money They provide a system of payments mechanism They provide a wide range of services They handle the exchange and settlement of cheques

Trustee Savings Bank (TSB) It is a fully fledged bank that offers a variety of services similar to the other clearing banks: current, deposit, savings and investment account, credit transfer facilities, overdrafts, personal and mortgage loans, combined credit and cheque guarantee card, travel cheques and foreign currency. State banks The National Savings Bank operated through the Post office The National Girobank: financially independent from the Post Office Merchant banks They are private firms that offer highly specialised services almost exclusively for business customers. Their main activities: Acceptance house activities: they lend their name to a bill of exchange issued by less well-known traders, so that it becomes more acceptable because of the bank's good reputation. They confirm the buyers ability to pay for the product Issuing house activities: they sponsor first issues of companies' shares , and they are intermediaries between companies seeking capital and those willing to provide it. Capital market activities: they accept larger deposits, provide finance for hirepurchase, advise on company problems such as capital reorganisations, offer consultancy services etc. Foreign banks There area bout 400 foreign banks in London. They provide services and credit to companies from their own countries operating in Britain, but some of them make substantial sterling loans to British borrowers, too. Banking in the USA In 1913, the Congress established the Federal Reserve System and required all national banks to belong to this system. State banks were invited to join and many did. Now most American banks belong to the FRS, which regulates banking in America. The nation is divided into 12 Federal Reserve Districts. There is one Federal Reserve Bank in each district. They operate under the centralised control of the Federal Reserve Board in Washington. It consists of 7 members appointed by the President and approved by the Senate for a 14-year term. This Board makes most of the major decisions for FRS. The Federal Reserve Banks do not business with individuals or business firms. They serve only the Federal Government and the members banks of FRS. The Federal Reserve Banks serve two main purposes: The Federal Government uses them to handle its own banking needs. The Federal Reserve Banks also handle the sale of bonds issued by the US Administration

The Federal Reserve Banks provide important services to the member banks. Member banks are required by law to set aside a part of their depositors' money . This is called their reserve and each bank must deposit its reserve in the FRB that serves its Federal Reserve District.

Vocabulary Deposit Treasury bill Gilt-edged securities Bill of exchange bett (bank tmakrben), de lehet lett is Kincstrjegy Biztonsgos llamktvnyek Idegenvlt; vlt = felttel nlkli fizetsi felszlts, amit vki alrsval killt vki msnak; a cmzettet arra utastja, hogy meghatrozott idben fizessen ki egy adott sszeget vagy egy bizonyos szemly szmra, vagy a dokumentum bemutatjnak. vltt leszmtolni, diszkontlni klring bankok, zsr bankok = olyan bankok, melyek tagjai a London Bankers Clearing Bank Association-nek, mely lehetv teszi a csekk- s kszpnzforgalom elszmolst Angliban takarkpnztr szmlahitel, hiteltllps = folyszmlahitel, meghatrozott hatrrtkig vltoz sszeggel rszletre vsrol vltbank; olyan pnzintzet, melynek tevkenysgei kz tartozik a vltk rtkestse akr elfogadssal, akr garancival. Valjban garantlja az ruk vsrljnak vagy importrnek pnzgyi helyzett azzal, hogy vllalja a vltktelezettsget, azaz alrsval igazolja, megersti, hogy a vev illetve az importr az rut ki tudja fizetni kibocsthz; olyan pnzintzet, mely a vllalatok tzsdei bevezetsben, illetve rszvnyeik kihelyezsben s a tkenvekedst clz tovbbi tranzakcik lebonyoltsban segdkezik szakosodott kereskedelmi bank

To discount a bill of exchange Clearing Banks

Savings bank Overdraft

To buy on the hire-purchase system Acceptance house/ accepting house

Issuing house

Merchant bank