Banking

Banking, also called banking system, is a set of institutions that enable the development of all transactions between individuals, organizations and companies involving the employ of money. Within the banking system, we can differentiate between public banking and private banking, which in turn, they may be commercial, industrial or mixed. The private banking business focuses generally on providing credits to private individuals. Within the banking public we can highlight the issuing bank or central bank, which has the monopoly of issuing money and usually belong to the State. 

The Banking Systems presents the following characteristics. The main role of a bank is save public money in the form of deposits, as well as to provide safe, transactions denominated liabilities. Banks charge a commission, which also apply to the various modern services that banks offer their customers, for example the popular credit cards. However, since the bank can dispose of the depositor’s savings, the latter paid by the payment of interest. There are various types of deposits that we will see below

a)        Current Accounts : When the client gives the bank a certain amount of money to keep it, and may dispose of them at any time. 

b)        Savings Accounts : These also are a kind of deposits, that is, you can dispose of them at any time. 

c)        Fixed-Term Accounts : In these accounts there is not free provision of funds, but they recovered to the expiration date, although in practice, these funds are available before the pre-fixed date, but with a consequence.  

d)        Certificates of Deposit : these are financial instruments very similar to deposits or fixed-term accounts. 

The Banks, with these deposits, give loans and credits to other customers, in exchange for taking on these other types of operations. These loans can be personal or commercial mortgages. The difference between interest received and interest paid is the main source of income for banks.