Mind map chapter 5
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The document discusses the functions of commercial banks and central banks. It summarizes that commercial banks primarily accept deposits and provide loans and advances. Central banks issue currency, keep reserves, safeguard currency value, act as a banker to the government and other banks, and promote monetary stability. Both commercial banks and central banks provide other banking services and facilities.
Mind map chapter 5
- 1. PREPARED BY : NUR AMIRA BINTI MD LAZI 30DLS12F1030
- 2. •- must be able Divisibility •easy to use and small to Acceptability Uniformity carry around •fulfil its various withstand being function using repeatly • money can easily •can accept for public •money must be same divide to smaller units must be able to use value and uniform of value the money for quality transaction Durability Portability Stability of value
- 3. Unit of account - Standard of Medium of money is Store of value - deffered exchange - common enable to people payment - many money can standard to to buy and sell contracts used for measuring good or services in promise to pay buying and relative worth different times and fixed sum of selling good or good and places. money well in the services. services. future
- 4. Commodity • Has own value that used for payment money • Anything that government has declare to be money Fiat money • Issued by central bank a country • Paper money that government approved to settle of Legal tender payment • Has a lower metallic than face value.. Token money • Coin 5sen.10 sen,20 sen,50 sen • By cheques Demand deposits • Known as bank deposits or current accounts.
- 5. • People hold money to buy goods or service Transaction • As income rise • Money demand increase motive • To keep extra money in case unforeseen Precautionary situations requires a capital outlay motive • store wealth as money or bonds Speculative • Interest rate high,bonds more attractive and hold less money motive • Money demand negatively related to interest rate
- 6. M1 :Narrow money – • Currency – coins and paper money issued by Bank Negara Transaction money or Malaysia (Fiat money) money which can be • Checkable deposits – account balance kept in commercial directly used for banks (demand deposits) transaction • M1= CURRENCY + CHECKABLE DEPOSITS M2:Near money plus M1 - A broader • M2= M1 + SAVINGS AND FIXED DEPOSITS IN COMMERCIALS BANKS + NCD + REPO + BNM definition of the supply CERTIFICATE of money and consists • NEAR MONEY (QUASI MONEY) =M2 – M1 of M1 and near money M3 : Broad money – • M3 = M2 + SAVINGS AND FIXED DEPOSITES IN OTHER Measure of money BANKING INSTITUTIONS supply which is the • BROAD NEAR MONEY (QUASI MONEY) = M3 – M1 broadest in definition
- 7. Banking institutions Central bank – Owned by government (Bank Negara Commercial banks – Primary financial that most people Malaysia) keep their money (Public Bank Bhd ) Non-bank financial institution Islamic bank - Baased on syariah Merchant bank – Not accept Discount house- Short term loans in principle.Dont have interest ( deposites from public (Affin financial market (Affin descount Islamic Bank) Merchant Bank Berhd) Bank berhad) Non-bank financial intermediaries Development financial institutions – Government Employees provident fund – Benefit to promote investment in the industrial and agriculture employees,constribute certain percentage the income sectors because provide firm or farmers make a loans. EPF each month
- 8. Accepting deposits Function of commercial Providing Banks other Providing banking loans and services and advances facilities
- 9. To issue currency and keep reserves safeguarding the value of the currency To act as a Be a holder of the banker and country’s stock of gold and foreign Function financial adviser to the currency reserves of central government bank To promote monetary To be banker to stability and a other banks financial structure