ECON 1010 Chapter : Econ - The banking System
30 Nov 2011
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Central bank- a public authority, which supervises other banks and financial institutions, markets and conducts monetary policies. The bank of canada is special in 3 ways: banker to banks and gov"t, lender to the last resort. Is a private firm that take deposits from households and firms and makes loans to other households and firms. 3 types of depository institutions: chartered banks, credit unions and caisses populaires, trust and mortgage loan companies. Chartered banks: receive deposits and make loans- largest institutions in the banking system. Credit union: a cooperative org receives deposits from and makes loans to its members. Trust and mortgage privately owned receive deposits, make loans and act as trustee for pension funds and for estates. Depository institutions earn income by using funds they receive and to make loans and buy securities that earn higher interest than that paid to depositors. (to achieve it, must perform a balancing act weighing return against risk)
