Banking Explained – Money and Credit

The international banking system is a mystery There are over 30,000 banks around the world And they carry an incredible amount of possessions The top ten banks alone have roughly $ 25 trillion Today, the banking industry can be more complex Although in the original, the idea was to make life simpler In the eleventh century, Italy was the center of European transactions. Merchants meet from all over the continents to trade their goods. However, there was one problem: Too many currencies in the course of trading In Pisa, merchants had to deal with seven different currencies. And exchange their money constantly. This commercial exchange, which usually took place in the open air on benches, He got the word "bank" from him. From "banco", the Italian word for seat. Travel risks, counterfeiting money, and difficulty getting a loan It made people think. It is time for a new business model. Mortgage brokers started giving credit to businessmen, Whereas, Genus City merchants developed cashless payments Distribute networks of banks around the world to distribute credit / balance Even to the church, or European kings What about today? In short, banks are in the area of ​​risk management It's a simplified version of the way you work.

People keep their money in banks and receive a small amount of interest. The bank takes this money and lends it at a much higher interest rate. It is a calculated risk, as some lenders will default. This process is fundamental to our economic system Because it provides people with the resources to buy things like houses, Or for the industry to expand and grow their business. Thus banks take unused money / financial resources through their savers. And turn them into money that society can use to do things Other sources of income include banks Accepting savings deposits, making credit cards, buying and selling currencies, Work Secretary, and cash management services. The main problem with banks now is That many of them abandoned their traditional role As funders of long-term financial products in favor of short-term gains Which carries a much higher risk During the financial boom, many major banks adopted it Financial contracts that were hardly comprehensive / comprehensible They did their own trade in an effort to make faster money Executives and dealers earn millions in bonuses Which is absolutely nothing less than gambling And the destruction of the economic system and societies Like going back to 2008, When banks like Lehman Brothers gave credit to anyone He wanted to buy a house, Consequently, the bank was placed in a very risky situation This led to a housing market collapse in the United States and parts of Europe Causing a drop in stock prices, This finally led to a global banking crisis And one of the biggest financial crises in history.

Hundreds of billions of dollars evaporated Millions of people lost their work and money. Many of the world's major banks have had to pay billions in fines Bankers / bankers became some of the least trusted professionals The US government and the European Union had to devise a massive bailout Together to buy bad properties and stop banks from going bankrupt New laws have been put into effect to regulate banking. Mandatory bank contingency funds applied To absorb shocks in the event of another financial crisis However, other models of difficult new legislation were successfully blocked by the banking lobby. Today, other models of financial supplies are profiting very quickly. Such as the large investment banks, which are responsible for annual fees and do not collect commission on sales Thus extending the incentive to deal with the best benefits for their clients, Or Credit Union: A cooperative initiative founded in the nineteenth century To dodge credit pennies In short, they provide the same financial services as banks.

But they focus on shared value, rather than profit maximization. The stated goal of the self is to help individuals create opportunities such as starting a small business, Expanding fields, or building family homes while the return of investment to the communities, They are controlled by their members who also elect the board of directors in a democratic manner. Worldwide, credit union systems differ significantly. Starting with a small number of members To organizations that deserve many billions of American dollars And hundreds of thousands of members. Focus on profits for their members Affects the risk that credit unions want to take. Which explains why credit unions, though also hurt, The latest financial crisis saved in a better way than traditional banks So that we do not forget the banging of the project financing system in recent years, Aside from creating the most amazing video games possible, Platforms have emerged that enable people to obtain loans from large groups to small investors Dodge the bank as a broker / middleman But it also works as an industry. A lot of modern technology companies started out with the Kickstarter system or IndigoJo An individual financier obtains the satisfaction of being part of something larger.

And he can invest in the ideas that they believe in. While the danger is widespread If the project fails, the loss is limited And last but not least: small loans Lots of very small loans, It is almost always spent in developing countries that help people escape poverty; People who were previously unable to obtain a means For the money they need to start a business Because they were considered unworthy of time Now, micro-credit grants developed for billions of dollars in business Therefore, banking may not be able to raise your street prices But the bank’s role is to supply financing to people and businesses Essential for society and must be done And who he does, and how it is done in the future, It's up to us to make the decision, though Translated by the team

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