Glamor Economics

Chapter 115

Chapter 15 Section 6 The "Big Brother" of the Financial Family - Banks

In our country, the word "bank" is related to the history of our country's economic development.In the history of our country, silver has always been one of the main monetary materials. "Silver" often represents currency, while "hang" is the title of a large commercial institution.The term "Bank" is used to refer to large financial institutions that deal with money and money, which was first seen in "A New Chapter of Senior Citizens" written by Hong Rengan of the Taiping Heavenly Kingdom.

A bank is a financial institution that undertakes credit intermediary through deposits, loans, exchange, savings and other businesses.It is one of the financial institutions, and it is the most important financial institution. Its main business scope includes absorbing public deposits, issuing loans, and handling bill discounts.

In the Middle Ages in Europe, there were two kinds of rich people, one was nobles and the other was bishops.So, banks are unnecessary because there is no commercial activity at all.

In the 17th century, some British commoners got rich through business and became wealthy businessmen.They all deposited their money in the king's mint for safety.At that time, there were no banknotes, and the so-called saving money meant storing gold.Because the "free coinage" system was implemented at that time, anyone could take gold bullion to the mint and mint it into gold coins, so the mint allowed customers to deposit gold.

But these merchants didn't realize that the mint belonged to the king, and if the king wanted to use the gold in the mint, they couldn't stop them. In 1638, King Charles I of England broke out a war with the Scottish nobles. In order to raise military expenses, he expropriated the gold of the common people in the mint, which was called a loan to the king.Although the gold was later returned to its original owner, the merchants felt that the mint was not safe.So they deposited their money with the goldsmith.The goldsmith issued a certificate for the depositor, and with this certificate in the future, he could withdraw gold.

Later, merchants discovered that when they needed money, they didn't need to take out the gold, they just had to hand over the gold certificate to the other party.Later, the goldsmith suddenly discovered that the vouchers he had issued had the function of circulation.So, they began to issue "false certificates."As long as all customers do not come to withdraw gold on the same day, the "false certificate" is equivalent to the "true certificate" and can also be used as currency.

From the above information, we can see that Western banks originated from the currency business.The currency business industry is mainly engaged in currency-related businesses, including identification and exchange of metal currency, currency custody and exchange business.When a large amount of money is gathered in the hands of money dealers, it provides a prerequisite for the development of loan business.With the development of the loan business, the safekeeping business has gradually changed into a deposit business.When monetary activities are combined with credit activities, the money management industry begins to transform into a modern bank. In 1694, the establishment of the Bank of England marked the establishment of the modern western banking system.

A bank is an enterprise that operates currency. Its existence facilitates the raising and financing of social funds. It is a very important member of financial institutions.In the previous chapter, we have introduced the functions of the central bank. In this section, we will take commercial banks as an example to talk about the main functions of commercial banks.A commercial bank refers to an enterprise legal person (financial enterprise legal person) whose main business is industrial and commercial deposits and lending, and whose main business goal is profit.my country's commercial banks mainly include Industrial and Commercial Bank of China, Agricultural Bank of China, Bank of China, China Construction Bank, and Bank of Communications.The function of a commercial bank is determined by its nature. The four basic functions of a commercial bank are:
1. Credit intermediary functions.Credit intermediary is the most basic function of a commercial bank and can best reflect the characteristics of its business activities.The essence of this function is to gather all kinds of idle money in the society into the bank through the bank's liability business, and then invest it in various economic sectors through the asset business; The intermediary or representative of the borrower realizes the financing of capital, and obtains interest income from the difference between the cost of absorbing funds and the interest income of loan issuance and investment income, forming bank profits.Commercial banks realize the accommodation between capital surplus and shortage through the function of credit intermediary, which does not change the ownership of monetary capital, but only the right to use monetary capital.

2. Payment intermediary function.In addition to acting as a credit intermediary and financing monetary capital, banks also have the function of money business.Through the transfer of deposits on the account, the agent pays for customers, and on the basis of deposits, cashes cash for customers, etc., and becomes the currency custodian, cashier and payment agent of industrial and commercial enterprises, groups and individuals.

3. Credit creation function.On the basis of credit intermediary functions and payment intermediary functions, commercial banks have produced credit creation functions.Commercial banks create and shrink demand deposits through credit activities, and demand deposits constitute the main part of the supply of the loan market. Therefore, commercial banks can use their liabilities as currency circulation and have the function of credit creation.

4. Financial service functions.With the development of the economy, the business environment of industrial and commercial enterprises has become more and more complicated. Many currency businesses that originally belonged to the enterprises themselves have been transferred to banks to handle on their behalf, such as payment of wages and payment of other expenses on behalf of others.Personal consumption has also developed from a simple money transaction to a transfer settlement.Modern social life has put forward financial service requirements for commercial banks from many aspects.

5. Regulation of economic functions.Through its credit intermediary activities, banks adjust the shortage of funds in various sectors of society, and at the same time, under the guidance of the central bank's monetary policy and the national macro policy, they realize the adjustment of economic structure, consumption ratio investment, industrial structure and other aspects.In addition, commercial banks can also adjust the country's balance of payments through financing activities in the international market.

[links to related words]

China Banking Association The China Banking Association was established in 2000. It is a non-profit social organization voluntarily formed by various commercial banks and policy banks registered in the territory of the People's Republic of China. It has been approved by the People's Bank of China and registered with the civil affairs department. Self-regulatory organization for the banking industry.

The abbreviation of China Banking Regulatory Commission and China Banking Regulatory Commission.According to government authorization, unified supervision and management of banks, financial asset management companies, trust and investment companies, and other deposit-taking financial institutions to maintain the legal and stable operation of banks.

(End of this chapter)