3.6. Banking and Finance - Types of Banks

(1) .... supervise the banking system; fix the minimum interest rate; issue bank notes; control the money supply; influence exchange rates; and act as lender of last resort.

1) Central banks

(2) .... are businesses that trade in money.

2) Commercial banks

In some European countries, notably Germany, Austria and Switzerland, there are (3).... which combine deposit and loan banking with share and bond dealing, investment advice, etc. Yet even universal banks usually form a subsidiary, known as a (4) .... to lend money - at several per cent over the base lending rate - for hire purchase or installment credit, that is, loans to consumers that are repaid in regular, equal monthly amounts.

3) universal banks 4) finance house

In Britain, the USA and Japan, however, there is, or used to be, a strict separation between commercial banks and banks that do stockbroking or bond dealing. Thus in Britain, (5).... specialize in raising funds for industry on the various financial markets, financing international trade, issuing and underwriting securities, dealing with takeovers and mergers, issuing government bonds, and so on. They also offer stockbroking and portfolio management services to rich corporate and individual clients. (6).... in the USA are similar, but they can only act as intermediaries offering advisory services, and do not offer loans themselves.

5) merchant banks 6) Investment banks

In Britain there are also (7).... that provide mortgages, i.e. they lend money to home-buyers on the security of houses and flats, and attract savers by paying higher interest than the banks.

7) Building societies

There are also (8).... such as the World Bank or the European Bank for Reconstruction and Development, which are generally concerned with economic development.

8) Supranational banks