Vitalija Sorokina 1Fa

Summary (banking).

These articles are about different banking types and how banks and the banking system works.
The author touches upon the first European bank to issue notes, which was the Stockholm
bank in Sweden in 1661. The first notes issued by the Bank of England in 1694 that was
represented the amounts of deposited money. The article deals with notes which were written
with black ink on white paper by hand. Only in 1870 notes were fully printed and in 1928 notes
became colour-printed. The author points out that forgers was sentenced to death and people
with fake notes were moved to colonies.
The author provides information that first known paper money was issued in the 7th century
in China, and that the biggest advantages are production availability, cheap price and
convenient logistics. The author confirms that our modern cheque system refers to the old
times, when merchants had to write instructions to the Goldsmith to pay another merchant.
Also, the article states that Bill of Exchange are still used internationally between traders -
debtors and banks.
Investment banking gives financial consultation which means they offer independent advice
and an experience in financial transactions and they advise strategic planning or financial
restructuring, raises capital – increased the amount of money had by issuing stocks or shares
and bonds, organizes mergers and takeover bids. They act as intermediaries between
companies and investors. Author acknowledges that Investment banks do not lend money
unlike commercial bank. Investment banking have a stockbroking and dealing department. The
stockbroking department also offers advice to investors.
Commercial banks are business that trade in money. They receive and hold deposits in current
and savings accounts, pay money according to customers’ instructions. Commercial banks have
to keep reserves for customers who want to withdraw their money. Bank offers both loans and
overdrafts. Which means that customer can take and overdraw money and should pay it back
with an interest.
Insurance companies provided life insurance and pensions and building societies specialized in
mortgages.
In the article about financial institutions the author believes that clearing banks pass cheques
and other payments through the banking system. Also, the article claims that non – bank
financial intermediaries such as car manufacturers, food retailers and department stores now
offer products like personal loans, credit cards and insurance.
The article comments on Central bank. It provides financial services to the government and to
the banking system. Some central banks are responsible for monetary policy – trying to control
the rate of inflation to maintain financial stability. The aim is to protect the value of the
currency-what it will purchase at home and in other currencies. In many countries, the central
bank supervises and regulates the banking system and the whole financial sector.
In some European countries there are universal banks which combine deposit and loan
banking with share and bond dealing, investment advice. Universal banks usually form a
subsidiary, known as finance houses.
In the article is mentioned there are also supranational banks such as the World Bank or the
European Bank for reconstruction and Development, which are generally with economic
development.
The author concludes by saying that the importance of the banking system cannot be
overestimated. No matter how difficult starting your own business can be, you can do it
because banks offer a great service.
As far as I know, nowadays banking system have been developing and improving. Banks
provide customers a lot of opportunities and high-level services. That is why now banks are one
of the most popular and important part of people lives and in economic growth as well.