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• Money Creation


  One of the great mysteries and elegant features of the financial system in general and of the banking sector
• Money flow/circulation in economy


  Needs to be controlled
• Too much money in circulation

  Lowers the value & purchasing power
• Policy on money


  Needed to control the money circulation & inflation in the economy
• Unemployed individuals are not included in the money circulation but still able to purchase goods and services
• Medium of exchange


  Money facilitates by serving as a medium of exchange. Instead of directly bartering goods and services, individuals use money to buy and sell goods and services. Money acts as an intermediary in transactions, making trade more efficient.
• Store of value


  Money can be held and exchanged later for goods and services. It allows individuals to save purchasing power for future use.
• Unit of account


  Money provides a common unit of measurement for expressing the value of goods, services, assets, and liabilities. (They can compare prices etc.)
• Standard of deferred payment


  Money can be used to settle debts over time.
• Measures of money


  • M0 (Monetary Base)
  • M1
  • M2
  • M3
  • M4
• M0 (Monetary Base)


  The narrowest measure of the money supply, representing the most liquid forms of money. Physical currency (coins and bank notes) that can be sold immediately/easily.
• M1


  A broader measure of money than M0 and includes assets that are readily accessible for spending. Includes M0 plus demand deposit (checking accounts).
• M2


  A broader measure of money than M1 and includes additional types of relatively liquid assets. Includes savings deposit & time deposits within 1 year.
• M3


  An even broader measure of money than M2 and includes additional types of less liquid assets. Consists of M2 plus large time deposits, institutional money market funds, and other liquid assets (Longer 1 year).
• M4


  The broadest measure of money supply and includes all components of M3 as well as certain other financial assets. All money markets and financial instruments.
• Monetary Banking Institutions


  • Private Sector Banks
  • Central Bank
  • Land Bank
  • Rural Banks
  • Mutual Banks
  • Building societies
  • Post office bank
• Private Sector Banks


  Banks owned and managed by private individuals or corporations. They operate with the primary goal of making profits for their shareholders (dividends).
• Central Bank


  The apex monetary authority responsible for formulating and implementing monetary policy in a country or a monetary union.
• Land Bank


  A financial institution that focuses on providing financial services and credit facilities to support agricultural and rural development.
• Rural Banks


  Financial institutions that primarily operate in rural areas and small towns, serving the banking needs of rural populations, farmers, small businesses, and agricultural enterprises.
• Mutual Banks


  Financial institutions owned by their depositors or members rather than external shareholders.
• Money creation


  One of the great mysteries and elegant features of the financial system in general and of the banking sector
• Money flow/circulation in economy


  Needs to be controlled
• Building societies


  Financial institutions that traditionally focus on providing savings and mortgage lending services.
• Too much money in circulation

  Lowers the value & purchasing power
• Post office bank


  A financial institution operated by a postal system or in conjunction with postal services. It can be an intermediaries (way) but it's has charge.
• Policy on money


  Needed to control the money circulation & inflation in the economy
• Roles of money


  • Business Growth and Investment
  • Entrepreneurship and Innovation
  • Consumer Spending and Purchases
  • Housing Market Stability
  • Financial Inclusion and Social Mobility
  • Monetary Policy Transmission
• Unemployed individuals are not included in the money circulation but still able to purchase goods and services
• Consequences of inflation - higher prices of everything
• Financial Inclusion and Social Mobility

  Means increase/development in socio economic status
• Migrations


  Cause inflation
• Monetary Policy Transmission


  Relates to the value of currency
• Medium of exchange


  Money facilitates by serving as a medium of exchange. Instead of directly bartering goods and services, individuals use money to buy and sell goods and services. Money acts as an intermediary in transactions, making trade more efficient.
• Store of value


  Money can be held and exchanged later for goods and services. It allows individuals to save purchasing power for future use.
• Unit of account


  Money provides a common unit of measurement for expressing the value of goods, services, assets, and liabilities. (They can compare prices etc.)
• Standard of deferred payment


  Money can be used to settle debts over time.
• M0 (Monetary Base)


  The narrowest measure of the money supply, representing the most liquid forms of money. Physical currency (coins and bank notes) that can be sold immediately/easily.
• M1


  A broader measure of money than M0 and includes assets that are readily accessible for spending. Includes M0 plus demand deposit (checking accounts).
• M2


  A broader measure of money than M1 and includes additional types of relatively liquid assets. Includes savings deposit & time deposits within 1 year.