In another era, banks were the only organizations with the capacity to offer capital or credit services to families as well as to companies. But with the growth of the financial market in recent years, banks have lost some of their former glory, however they still perform well and maintain their role in the country’s economy.
In economic terms, banks play a major role, the effects of which are not negligible. If in the majority of cases, these credit institutions work in the management of the finances of their customers (individuals or companies) by serving as a deposit of money or by providing them with loans, it should be known that they can quite carry out other much more important missions. Among their most important roles is financial intermediation between economic agents and money creation.
Banks receive and manage the resources of economic agents
Banks therefore play the role of intermediaries between economic agents. In principle, agents who have the capacity to finance lend capital to the bank, which in turn provides loans to agents in an economic deficit situation. The economic agents to whom it lends money can be individuals or companies. This loan manifests itself in the form of money deposits. This kind of operation guarantees the proper functioning of the movement of capital which is very favorable to the economy.
Current accounts and deposit accounts
Banks receive funds from their customers and open different types of accounts in their own name or that of a company name (for companies). A distinction is made between current accounts and deposit accounts .
Current accounts , or current accounts , refer to perfectly liquid deposits. Holders of sight deposits can use their resources at any time; this is why this category of account is called “on sight”. It is in view of the customer’s order that the banker carries out the account holder’s order: to honor a customer’s claim or to deliver cash (banknotes).
The deposit accounts are extensive and which includes funds that bank customers intended to save. These deposits are associated with a more or less remunerative interest depending on their amount, the immobilization period of savings and government regulations in force. We can cite, by way of example, term accounts (CAT), home savings plans (PEL) or stock savings plans (PEA).
Banks refinance the economy
The economy of a nation eternally encounters the problem linked to the refinancing of the activity of the various economic agents who evolve in their professional and domestic daily life. This refinancing inevitably requires more or less substantial funds, such as for companies that will need to finance large-scale projects or even families who consume on credit . However, there is also a segment of the population that manages to save , this savings placed in the bank serving to finance other agents in need.
The creation of scriptural money
Only banks have the right to create money in a country. Indeed, they can create and manage debts . This is called scriptural money . The impacts of this currency policy on the national economy are essential. Thus, there is the “injection of liquidity into the economic circuit” produced by this creation of money which will subsequently help to increase the multiplier effect of credit.