In: Finance
discuss the role of each of the following in the financial system banks central bank surplus unit deficent unit financial markets.
1. Banks
´Financial institution which accepts deposits from public
´Repayable on demand
´Lend money
´Borrow deposits at lower rate and lend it at higher rate
´Lending money for longer periods affects liquidity
´Mainly concerned with short term requirements of the trade
2. Central Bank
Creation and Expansion of Financial Institutions
Adjustment between Demand for and Supply of Money
Monetary authority of the country
Currency Issuer
Frames interest rate policy for the country
Credit controller and debt controller
3. Surplus units and deficient units
4. Financial Markets