Banks plays major roles in the economy. There are some as under:
issue of money, by mean of banknotes and cheques. These claims on banks can act as money because they can be bought/sold and redeemed on demand.
Settlement and netting of payments : Banks act both as collection agent and paying officer on behalf of their customers.
credit intermediation : Banks borrow and lend back on their own account as intermediary.
maturity transformation :banks borrow on demand liability and short term liability, but provide more long term loans.
en.wikipedia.org
issue of money, by mean of banknotes and cheques. These claims on banks can act as money because they can be bought/sold and redeemed on demand.
Settlement and netting of payments : Banks act both as collection agent and paying officer on behalf of their customers.
credit intermediation : Banks borrow and lend back on their own account as intermediary.
maturity transformation :banks borrow on demand liability and short term liability, but provide more long term loans.
en.wikipedia.org
