Banking Services, Competitors, and Regulators
Banking Services
- Advancing of Loans
- Overdraft
- Discounting of Bills of Exchange
- Cheque Payment
- Collection and Payment of Credit Instruments
- Foreign Currency Exchange
- Consultancy
- Bank Guarantee
- Remittance of Funds
- Credit Cards
- ATM Services
- Debit Cards
- Home Banking
- Online Banking
- Mobile Banking
- Accepting Deposits
- Priority Banking
- Private Banking
Financial Competitors
- Savings & Loan Associations
- Savings Banks
- Credit Unions
- Money Market Funds
- Mutual Funds
- Hedge Funds
- Securities Brokers & Dealers
- Finance Companies
- Casualty Insurance Companies
- Financial Hedging Companies
Banking Regulators
Office of the Comptroller of the Currency (OCC)
- Assures the need & charters new national banks.
- It regularly examines those institutions; these examinations vary in frequency & intensity with the bank’s financial condition.
- The OCC will examine every national bank at least once every 12-18 months.
- The OCC’s office must approve all applications for the establishment of new branch offices by national banks & any merger where national banks are involved.
- The OCC controls a national bank that is insolvent or in danger of imposing substantial loss on its depositors.
Federal Reserve System (FED)
- It serves the banking industry as a lender of last resort.
- Providing loans to financial institutions.
- It helps to stabilize the financial markets in order to preserve public confidence.
- The Fed was also created to provide important services to the banking industry, that is, the establishment of a nationwide network to clear & collect cheques.
- Its important job is to control money & credit conditions to promote economic stability.
Federal Deposit Insurance Corporation (FDIC)
- It was created to guarantee the public’s deposits up to a stipulated maximum amount.
- It has helped to reduce the number of potential bank runs significantly, though it has not prevented bank failures.
- Each insured bank is required to pay the FDIC system an insurance premium based upon its volume of insured, eligible deposits & its risks.
Central Banking System (CBS)
The principal role of a central bank is to carry out monetary policy, which involves making sure the supply and cost of money & credit from the system contributes to the nation’s economic goals.
One of the most important financial institutions in any economy is the central bank. Some of the world’s best-known central banks are as follows:
- The FED, ECB, and Bank of Japan carry an image of great financial power & prestige.
- The central bank of the US is called the Federal Reserve System.
- The nations belonging to the new European Union also have a central bank called the European Central Bank.
European Central Bank (ECB)
- In January 1999, 11 member nations of the European Union launched a new monetary system based on a single currency, the euro, & one monetary policy-making body, a single central bank, which is the ECB.
- It takes the leadership to control inflationary forces to promote a better European economy & also help to stabilize the value of euros in international markets. The main goal is to maintain price stability.
- The principal policy tools of the ECB to help achieve greater price stability are open market operations & reserve requirements.
Why Banking Regulation Matters
- To protect the safety of public savings.
- To control the supply of money & credit in order to achieve the nation’s broad economic goals.
- To ensure equal opportunity & fairness in the public’s access to credit & other vital financial services.
- To avoid concentrations of financial power in the hands of a few individuals & institutions.
- To provide government with credit, tax revenues, & other services.
- To help sectors of the economy that have special credit needs (housing, small business, agriculture).