The Banking System. What is a Bank?. What is a Bank?. A FINANCIAL INTERMEDIARY —connects money from savers to people who need to borrow it. Financial intermediaries include many types of institutions—some are banks, some are not
Annual percentage change in the monetary base—January 1, 1961 to April 1, 2009—Wall Street Journal, June 11, 2009
Balance Sheet Banks?
An accounting tool that states the financial position of the business.
One side shows assets and the other side shows liabilities.
Cannot force people or businesses to take out loans…OR…
Someone may take out a loan and it may not get deposited in another bank.
Because of Leakage the maximum amount of new money may not be created.