Account • Bank accounts represent financial accounts in banks in which financial institutions hold money for account holders, resulting in a debt balance or positive balance. Alternatively, banks loan money to customers, and this leads to a credit or negative balance. Bank accounts are used to deposit savings, unlike brokerage accounts which are used to sell and buy securities. Savings and checking accounts are two main types of bank accounts. Broadly speaking, a bank account refers to a monetary account, designed to process multiple transactions. Bank accounts make it possible to deposit money, thereby earning monetary returns. Some accounts come with debit and credit facilities and cannot fit neatly in a polarized definition. They have different names depending on the country where you open an account. For example, checking accounts in Canada and the United States correspond to current accounts in the United Kingdom. There are different types of bank accounts, and some may work better for you than others. If you choose a checking account, you can loan or give money, pay bills, and make purchases. Checks can be used for money transfers as well. You can transfer money from your account to a bank account held at a different bank. Typically, you will be allowed to make as many withdrawals and deposits as you need to. Many bank clients also choose to deposit and withdraw money through automatic teller machines. A savings account is another type of account that pays interest. Account holders cannot write checks or otherwise use the money directly. With this account, holders deposit some of their liquid assets and earn monetary returns in exchange for that. Money cannot be called in immediately, and you cannot free up cash without incurring a penalty fee. Banks typically limit the number of financial transactions (deposits and withdrawals) that can be made every month. At the same time, holders of savings accounts may be allowed to withdraw money and make deposits through ATMs. Passbooks are provided with savings accounts, helping account holders keep track of the transactions they make. Another type of bank account offered by some institutions is the no-frills bank account. It is a basic account that allows bank clients to cash checks and pay bills without having to pay high fees for these transactions. If you choose such an account, you may be allowed to make only a limited number of withdrawals and deposits. The number of checks to be processed will also be limited within a given month. No-frills bank accounts typically don’t go with interest. A money market account is still another deposit account offered by banking institutions. They invest in various corporate and government securities, thus paying interest to depositors. Interest paid is determined by the current interest rates set on the money markets. Money market accounts differ from other bank accounts in that they offer a higher interest rate and thus, a higher minimum balance is required. In this way, bank clients avoid paying monthly fees and earn interest. Finally, certificates of deposit are yet another type of bank account in which bank clients deposit certain amount of money for a specified period of time. You cannot withdraw the money from the account before the maturity date. Some banking institutions allow this, but you will be charged a penalty fee. The interest banks pay on certificates of deposit is normally higher, compared to other types of accounts. However, the interest is based on the period of maturity, meaning that the longer it is, the more the account will earn. Acount statement • a statement of recent transactions and the resulting balance; they send me an accounting every month Aknowledge • report the receipt of; The program committee acknowledged the submission of the authors of the paper Agent Bank • a bank that acts as an agent for a foreign bank • a bank named by a multi-bank lending syndicate to protect their interests. Balance A bank account balance stands for the net of credits and debits of an account as of the end of every reporting period. This is applicable to all account types. The amount your bank owes you is shown in the bank account balance while what you owe to your credit card issuer is shown in the credit card balance. In simple words, an account balance is the money you presently have in your bank account. In banking, account balances give important information. They determine if account holders have enough money to cover living expenses, outstanding debts, or emergency expenses. Account balances are also important in margin accounts as they determine whether account holders can carry out margin transactions. The available balance represents the bank account balance you can access and use. This excludes deposits of checks that are not collected as of yet. The available balance includes the withdrawals and deposits which are posted to your bank account provisionally but are still to be finally posted. The book balance or current balance, on the other hand, covers all withdrawals and deposits that your financial institution has processed against your bank account on the previous working day. In some cases, your current balance may be lower than your available balance. The reason is that your current balance represents your account’s balance at the end of the prior working day. So, it will not reflect any transactions in progress as of present. In other cases, your available balance may be lower than your current balance. The available balance includes deposits which are not finally posted as well as withdrawals from your bank account. If it happens that the current day’s withdrawals are in excess of the collected deposits, the available balance will be lower than the current balance. Note that what you have at your disposal is the available balance. It is important to have an idea of your bank account balance so that you don’t withdraw money than you haven’t deposited in your bank. You may incur high overdraft fees if you do that. You can check your bank account balance in one of three ways. You can visit the nearest branch of your bank, go to an ATM, operated by your bank, or check the account balance online. If your bank offers online banking, you can simply open your bank’s website in your Internet browser. Use your username and password to log onto your account where you can check your bank account balance. If you don’t have a username and password, you will have to select the ‘register’ feature. You will then have to fill out the required fields so that your online profile gets lined to your bank account information. If you have more than one account, select the one you wish to find the balance of. You will see all recent withdrawals and deposits, as well as any remaining fees. Visiting a local branch of your financial institution is another way to do that. Simply give the teller your account or debit card and request that your bank account balance be printed out. It takes less that a minute to print it off, and you have the balance at your disposal. Finally, you can use an ATM operated by your bank. If the machine is not affiliated with your financial institution, you may be unable to access your bank account details. To check the balance, insert your card into the reader and type your PIN. Press ‘check balance’ after you select the account you want to check, and the information will show on the screen. Bank • Banks are financial institutions that play the role of financial intermediaries, channeling funds between deficit and surplus sources. An example of an intermediary is a banking institution which turns deposits into loans. Financial intermediation is a function of banks through which certain liabilities and assets are transformed into different kinds of liabilities and assets. In this way, banking institutions channel funding from savers, who have deposited extra money, to borrowers who need additional financing for certain objectives and planned activities. Banking institutions can be subdivided into several types of financial entities according to their focus and activities. The three main types are central bank, savings bank, and commercial bank. Central banks function to circulate money on behalf of their respective governments. They regulate the money supply by acting as a monetary authority which implements the country’s monetary policy. In the United States, the Federal Reserve System acts as the central banking system. Its responsibilities include regulating and supervising banks in the country, implementing the national monetary policy, and maintaining a stable financial system. Another duty is providing financial services to the government, official institutions of foreign counties, as well as depository institutions such as credit unions, savings and loan associations, commercial banks, and savings banks. Basically, these are financial institutions which can legally accept deposits from their clients. Mortgage banks are a type of a non-depository institution. Such entities are not allowed to accept deposits by law but are licensed to extend financing. Savings banks are another type of bank, which can be mutually or stockholder-owned. The main purpose of savings banks is to accept deposits, but they may have other functions as well. Some saving banks specialize in retail banking, including credit and insurances, savings products, and payments. They mainly service medium-sized and small enterprises and individual clients. Unlike commercial banks, savings banks provide regional and local outreach because of their decentralized distribution networks. Generally, savings banks are financial institutions which accept deposits and pay dividends or interest to savers. They channel the deposits of savers to borrowers who require financing. Savings deposit departments specialize in this at the trustee savings banks, credit unions, mutual savings banks, and savings and loan associations. It is important to note that savings banks do not handle demand deposits. Commercial banks are a third type of bank which accepts deposits and transforms them into credit. The latter can be invested indirectly on the capital markets or provided in the form of loans. When it comes to the global financial markets, commercial banks serve as the link between capital surpluses and capital deficits. In general, commercial banks are financial institutions that offer a number of deposit accounts, including savings, checking, and time deposit. While these institutions are owned and run by groups of investors, some of them are members of the Federal Reserve. In addition, these institutions offer various services to individuals, but their main purpose is to accept deposits and provide loans to businesses. In addition, commercial banks provide money market, transactional, and other accounts. There are many banking institutions in the United States to choose from, depending on your requirements and location. Among them are the U.S. Bank, Wachovia Bank, Bank United, Bank of America, Capital One Bank, and many others. Credit unions are an alternative to banking establishments. They are member-owned cooperatives, which feature the same financial services and products as banks do. US credit unions have close to 90 million members. You can choose from credit unions such as DFCU Owners United, Save First Basin Credit Union, Save Columbia Credit Union, and others. Bank Discount • interest on an annual basis deducted in advance on a loan Bank Draft • A bank draft refers to a kind of check whereby the issuing bank guarantees the payment. Banking institutions normally review requesters’ accounts to check if funds are sufficient for the check to clear. Upon confirmation that money is sufficient, the bank will set aside money from the account of the person as to give out. A bank draft normally involves transactions with considerable amounts of money and cases in which trust can be an issue. The term bank draft is more commonly used in Great Britain and Canada. It is better known as cashier’s check in the United States. Bank drafts are issued by banking institutions as an alternative to checks. People sometimes issue checks even when they don’t have enough money for a check to clear. With bank drafts, the full amount is paid, along with a small service charge, before the check clears. The bank will then issue a draft to the party involved. The main benefit of bank drafts is namely the fact that the whole amount is paid in full, ensuring credibility and the check’s clearance. The bank draft may be compromised only because of forged draft. Bank drafts can be used for a variety of purposes, for example purchasing services in commercial or corporate settings. The majority of commercial enterprises actually prefer bank drafts to checks. At the same time, financial institutions can issue bank drafts even in case customers don’t have an account. Bank drafts are the preferred payment method if guaranteed funds are required to pay someone. If you are buying a house, for instance, you may have to use this form of payment rather than a personal check. Bank drafts are often used in international trade as well. The bank draft is also known as a demand draft, bank check, treasurer’s check, and teller’s check. Being treated as guaranteed funds, bank drafts clear on the next working day. The client can request next-day availability because many banking institutions will not have the check cleared immediately. Banks are allowed to take funds back 1 to 2 weeks later if it is found out that the check is fraudulent. Legitimate bank drafts display the issuing bank’s name on a visible place which is typically the upper center or upper left-hand corner of the check. Bank drafts also come with other security features, such as special bond paper, watermarks, color-shifting ink, and security thread. All these aim to limit the risk of receiving fraudulent checks. The front of the check should contain words in a visible place so that the bank draft is recognized as such. The front should also contain the name of the payee, the remitter’s details, the numeric and written amount, which has to be tendered, the branch of issue, and other tracking information. One or two officers or employees of the bank sign the check, but some banking institutions issue bank drafts with a facsimile signature of a senior bank official such as the chief executive officer. Some people prefer to pay for purchases with cash, but this is not the best of ideas in all cases. With bank drafts, you obtain a record of the transaction, which is not always the case with cash. Drafts are typically made out to persons to whom you make a payment, and this will be recorded as well. You can prove that you have withdrawn cash from your bank account, but you cannot always prove that you gave it to another person. It doesn’t cost much to have a bank draft issued – typically several dollars per one hundred. This cost is reasonable given the greater security. Bank Examiner • an official appointed to audit the accounts of banks in a given jurisdiction Bank holding Company • a holding company owning or controlling one or more banks Bank Holiday • any of several weekdays when banks are closed; a legal holiday in Britain Bank note • Bank notes are promissory notes paid to bearers on demand. They are made by banks and represent fiat money or money with value, which is created under government law or regulation. Originally, coins were produced from semi-precious and precious metals and served to settle trades. Bank notes are an alternative to coins and their use involves some advantages and disadvantages. For example, the wear costs of bank notes are low – they can be used as a payment instrument even if in poor condition. Banks still have to replace banknotes and they wear out quicker than coins. In addition, bank notes are printed on polymer or paper, and their cost is lower than coins, which are produced from semi-precious metals. Finally, it costs less to transport bank notes, compared to coins, because they are lighter. Millions of financial transactions around the globe involve bank notes. They are regarded as legal tender and are money or currency. The US Federal Reserve regulates how much currency is created and distributed in the country by the Bureau of Printing and Engraving. The Federal Reserve issues bank notes, and they carry emblems to indicate that. Bank notes have clearly printed values as well as security features to minimize the risk of forging. The central banks of other nations also issue bank notes. Some people are interested in historic examples of bank notes and collect them. This branch of numismatics studies currency, money, and financial systems in general. Sometimes, bank notes do not function as money and legal currency, but they have numismatic value. Confederate bank notes were printed during the American Civil War, for instance. They are not in circulation, but are an object of interest and have monetary value. Similar to paper money, some people also have collections of antique coins. Different materials have been used to issue bank notes over the years, including paper, leather, and silk. Silk provides additional security and durability and is used in the manufacturing of different bank notes. Leather notes had been issued in times of emergency such as sieges. For example, they were produced from sealskin under the Russian administration of Alaska. France and French Canada used playing cards as money in the 19th and 17th – 18th century respectively. Germany, after the First World War, and the Isle of Man also used playing cards as currency. Canada printed bank notes on wood in the period 1763 – 1764 while checkerboard pieces served as currency in Bohemia in 1848. Bank notes are also called bills and notes. Depending on the region or country of origin, bank notes differ, but all have a monetary value. One issue with bank notes is that they are easier to forge. If you are given a note and suspect it is a counterfeit, you should bring it to the police. The note will be sent for analysis. Bear in mind that a counterfeit bank note is worthless, and you should not pass or hold it. This is a criminal offence. The lifetime of bank notes is limited, and states collect them for destruction, typically through shredding or recycling. Financial institutions such as banks remove bank notes from the money supply after some time because of wear and tear. Human inspectors check whether notes are torn, mutilated, and unfit for further use. Alternatively, sorting machines can be used to determine whether bank notes need to be removed and shredded. Counterfeit notes are also destroyed unless forensic or evidentiary purposes require a counterfeit to be held. Contaminated banknotes are also removed from circulation in order to prevent the spread of infections and diseases. Banking • Banking refers to a number of activities related to receiving money on deposit and current accounts, making advances to clients, paying and collecting checks, extending loans, and other banking activities. Banking activities are carried out by banks and other financial establishments. They accept funds deposited by savers on current accounts and issue debt securities like bonds and banknotes. Banks also invest in market securities, make advances, and give out instalment loans. Banking establishments offer a variety of payment methods and services, and bank accounts are considered an important part of the work of governments, businesses, and other institutions. Remittance companies are an example of non-banks, which offer payment services, but these cannot substitute bank accounts. In general, banks perform a number of activities. They invest in securities, make loans, issue bank drafts, certify depositor’s checks, and collect notes, drafts, and checks, Banks also receive time deposits and demand deposits and pay interest on them. Banking and other financial services can be accessed through a variety of channels. Banking transactions can be conducted through online banking and mobile banking. Online banking allows clients to make transactions on secure websites, maintained by building societies, credit unions, virtual banks, etc. Many US banks and other financial establishments offer online banking services. Among them are the Bank of America, ING Direct, U.S. Bank, and Citibank, among others. Telegraphic and wire transfers and bill payments are made possible. Clients can use online banking to pay bills, review transaction history, transfer money, view credit card account activity, and more. Online banking makes it easier to track payments anytime. It is easy and convenient to view one’s account and balances, check transactions, add alerts, etc. Clients can create budgets, prepare for tax seasons, track investments, and even view accounts held at other financial institutions. Mobile banking, also called SMS banking, mbanking, and M-Banking, can be used to make payments and account transactions, fill out credit applications, and carry out balance checks. These are done through devices like Personal Digital Assistant or one’s mobile phone. Apart from mobile and online banking, other services include telephone banking and video banking. Transactions are made over the phone with telephone banking, and clients do not communicate with a human operator. A remote audio or video connection is used in video banking for banking consultations and banking transactions. Banking can also be done in retail locations and branches, as well as via call centers and ATMs. Banking is a major driving force for the US economy. Banks provide a safe place for extra cash, which is known as deposits. Banks also ensure the liquidity of the economy by lending money to businesses, thus helping them grow and expand. Bank clients also borrow money to buy homes, vehicles, big-ticket items, and various consumer products. Banking establishments offer various types of loans, including personal and business loans, education loans, mortgages, auto loans, and many others. Borrowers can choose between secured and unsecured loans depending on their creditworthiness and requirements. Banks charge interest rates to make money and pay for deposits. In general, the interest rate represents a percent paid or charged for the use of money. When funds are borrowed, interest is charged, and it is paid when money is loaned. Banks pay interest when money is deposited and use it to extend loans. Borrowers are charged higher interest rates so that banks can profit from their services. When interest rates go up, fewer businesses and people can afford to pay off loans. Economic growth is slowed down in this case. More people are able to save by receiving more on the savings rate. Blank Check • a check that has been signed but with the amount payable left blank Blank endorsement • an endorsement on commercial paper naming no payee and so payable to the bearer Bonds • Bonds are debt securities issued by an authorized issuer that owes debt to holders and pays interest for the use of the principal. A bond represents a contract to pay off the money borrowed and in that, it is a debt investment. Investors loan money to government or corporate entities which borrow the funds for a specified period and at fixed interest. The US government, states, municipalities, and various companies use bonds to finance different activities and projects. Bonds are a fixed-income security and one of the major asset classes, together with cash equivalents and stocks. There are various types of bonds, including notes and bills, municipal bonds, corporate bonds, and U.S. Treasury bonds. In general, bonds are defined by two features, duration and credit quality, which determine the interest rate of bonds. Bond maturities vary widely – from 30-year government bonds to 90-day Treasury bills. Like stocks, bonds are securities, but there is one important difference between the two. Stockholders are the owners of a company and have equity in it while bond holders are lenders, with creditor stake in a company, establishment, or another entity. In addition, bonds have maturity or a specified term after which they are redeemed. Stocks, on the other hand, can be outstanding for an indefinite period of time. Basically, bonds are similar to loans and help borrowers make long-term investments. Government bonds are used to finance current expenditure. It is important to note that commercial paper (fixed-maturity unsecured promissory note) and certificates of deposit are not bonds but money market instruments. Treasury bonds are debt securities that pay fixed interest until maturity. Interest is paid every 6 months, and bonds are issued with up to a 30-year term. Treasury bonds or T-Bonds are a US government debt security instrument with income being taxed at the federal level only. The minimum denomination of treasury bonds is $1,000. They are first sold through action and then can be traded on the secondary market. Corporate bonds are a type of bonds issued by corporate entities. Corporate bonds are issued to raise capital and expand business corporations. They are normally long-term debt securities, with a term of one or more years after the date of issue. Commercial paper is another term used for debt instruments with a shorter term. In general, corporate bonds are sold to investors and backed by the company’s payment ability. This is usually money expected to be earned from future projects and operations of the company. The physical assets of corporations are sometimes used as collateral. Note that corporate bonds carry higher risk compared to government bonds. They go with a higher interest rate for this reason. This type of debt financing is a main capital source for many business entities, together with lines of credit and bank and equity loans. Companies that can show a consistent potential for earning offer debt securities at an attractive coupon rate. Municipal bonds are another variety of bonds issued by local government structures. They are issued by local government entities and their respective agencies. Among the issuers of municipal bonds are counties, cities, school districts, special-purpose districts, publicly owned airports, redevelopment agencies, and others. Municipal bonds are secured by issuers by specified revenues. The interest income that holders receive in the US is oftentimes exempt from income tax and federal income tax, but not all bonds are exempt, depending on their purpose. Price restrictions apply to new issue stocks, but once they are bought by investors, bonds can be traded any time. The same bonds may be re-traded several times a week by professional investors. CD • a debt instrument issued by a bank; usually pays interest Central Bank • A central bank is a financial institution responsible for issuing the national currency, controlling interest rates, and regulating money supply. Central banks also act as lenders of last resort for other financial institutions in times of financial crisis. They have supervisory functions so that financial establishments function properly. In addition to these responsibilities, central banks manage the government’s stock register, gold reserve, and foreign exchange of the country. They establish the official interest rate and make sure it is effective through different policy mechanisms. Central banks, also called reserve banks, may function within one country or a group of countries as to make sure that the money supply is stable in a particular area. Central banks can be government-controlled or owned depending on the country. Alternatively, they can be established in such a way as to prevent government interference in their functions. Some argue that central banks function more effectively if they are independent from the official fiscal policy. In this way, they are not affected by the political objectives of any government or regime. Central banks should not have commercial banking interests of any kind as well. In principle, central banks handle the selling and buying of government bonds and other financial instruments and are often called governments’ banks. At the same time, political decisions and official policies should not affect the operations of central banks. The relationship between governments and central banks naturally differs from one country to another and evolves with time. To have a stable currency, central banks should function as an authority and regulator in the monetary and banking systems. Central banks have two basic functions – macroeconomic and microeconomic. On the macroeconomic level, they regulate inflation and prices while on the microeconomic level, they are lenders of last resort. Central banks carry open market transactions which aim at improved market liquidity or absorbing extra funds to curb inflation. The central bank may seek to reduce the interest rate or increase money in circulation by buying bills, government bonds, or other instruments. The Federal Reserve stands for the main monetary authority of the United States. While it has been established by the Congress, the Federal Reserve is not under the authority of the federal government. The Federal Reserve Act defines the aims of the monetary policy, specifying that the Federal Open Market Committee and the Board of Governors should work toward moderate interest rates in the long term, stable prices, and better employment opportunities. When price stability is maintained, the prices of goods, materials, services and labor are not affected by inflation and allow efficient distribution of resources. Stable prices also contribute to capital formation and saving. On the other hand, the Federal Reserve recognizes that some factors may affect the economy of the country in unforeseen ways. Among them are shifts in business and consumer confidence, disruptions in the oil market, natural disasters, and agricultural losses, among others. In general, central banks aim to ensure economic growth, high employment, price stability, financial market stability, and interest rate stability. Price stability is affected by inflation, which results in losses for lending institutions. Central banks seek to establish such monetary policy that a steady rate of inflation is maintained. Another goal of monetary policy is to reduce unintended employment which is beyond frictional unemployment. Investment in technological advances facilitates economic growth through enhanced production capabilities. In addition, central banks aim to achieve interest rate stability. Volatile exchange rates and interest increase the costs for borrowers and lenders. Unexpected changes in this direction make the formulation of policy difficult and cause damage to the economy. Foreign exchange and financial market stability are also goals of monetary policy. certified check • A certified check is a type of check, which banks certify, verifying that funds are sufficient in the account. This money will be set aside and held in an internal account of the bank until the check is returned by the payee or cashed. Certified checks do not bounce and are like cash in terms of liquidity. With this type of check, banks guarantee the recipient that the holder’s account has sufficient funds deposited to be transferred. Banks also guarantee that the signature of the accountholder is not forged. Certified checks come handy when a recipient is not sure about the account holder’s creditworthiness and wants to prevent the check from bouncing. In general, certified checks are used if the payee wants to make sure the check is good as well as for making down payments on homes and cars. Certified checks were widely used in many countries before the advent of electronic transfers, debit cards, and gift cards. Certified checks are a liability of the issuing bank, and it will set aside the sum of money, which is listed on the check. Certified checks have their downsides as well. First, depositors are typically not allowed to place a stop payment order on such checks. Second, most banking establishments charge a fee as to certify checks. If the payee is a client of the issuing bank, there is a good chance that it will reduce the charge. With some account types, the check will be issued free-of-charge. You will be charged an issuance fee if you are not a client of the bank. Keep in mind that in some cases, you can obtain a certified check only if you have a checking account at the bank. After you write the check, the teller has to stamp it certified. Your banking institution will put a hold on this sum in your checking account, thus guaranteeing funds’ availability. If you want to get a certified check, the first thing to do is check whether you have enough money in the account. It has to cover the amount of the check and the fee of your bank. Certified checks are not issued through the drive through; so, you have to actually speak to the teller and explain what you need. Make sure you bring your account information with you, including some form of identification such as an ID card or your driver’s license. After verifying your account balance, the teller will ask you to write the check in front of them. It is a good idea to record the check’s amount and number in your check register. Then, you can present the check to the person or entity that requested it. In case you lose the check, proceed as with an ordinary check. Ask your bank to issue a stop payment for it. A certified check is not drawn on a regular checking account. It is issued directly by a banking establishment. Anyone can request such a check payable to a specific recipient. Certified checks are among the oldest checking services that banks offer. They can be used to forward a documented financial instrument to a specific
Posted on: Sun, 20 Oct 2013 15:56:52 +0000
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