How the Bank Works

What does the bank do

Banks are financial institutions that absorb public deposits, issue loans, and handle settlements. Most banks implement a partial reserve system, which allows banks to deposit a certain percentage of reserves with the central bank and use the remaining funds for loans and other services. Banks naturally derive new deposits while issuing loans, making them have the ability to create money.

Banks play an important role in the financial system and have a huge impact on the financial stability of a country and the world. They are usually placed under the strict supervision of the financial management authorities of various countries. In addition to meeting the different regulatory rules of financial regulatory authorities in different countries or regions, banks generally follow the minimum capital requirements based on the Basel Agreement.

Basel Accords

The Basel Accords, whose full name is the Capital Accord, is a member of the Basel Committee of Banking Supervision, in order to maintain the stability of the capital market, reduce unfair competition among international banks, and reduce the banking system Credit risk and market risk, the introduction of capital adequacy ratio requirements. It was first established in 1988 and revised for the second time in 2003.

And the third revision of the Basel Agreement, established on September 12, 2010, the agreement strengthened capital adequacy requirements and added new requirements on liquidity and leverage ratios.

Mode of operation

Banks are responsible for paying cash, cashing checks, currency conversion and collecting checks to customers. In addition, it also provides customers with other payment methods, such as wire transfer, terminal and ATM.

Banks accept deposits, time deposits, and issuance of certificates such as banknotes and bonds for loan purposes. These loans, borrow money, accept funds to deposit in current accounts, accept fixed deposits and issue debt securities such as paper money and bonds. Bank loans are used for loans to customers, installment payments, and investment in securities and other loan purposes.

Handle the issuance and re-issuance of letters of credit, guarantees, performance bonds, and securities underwriting. Document guarantee and safe business.

Banks can provide all payment services. For most companies, individuals, and governments, a bank account is a must.

Most of the bank deposits come from household units and non-financial companies, and most of the borrowers are household units and non-financial companies.

Environmental protection concept

To reduce paper consumption and protect the environment. Nowadays, banks are switching to electronic monthly statements to replace bank books.

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