Banking History Module Overview
Banking History
Introduction
Does history truly repeat itself? Decide for yourself as we look at the history of banking. In the past, banks have been blamed, justly or unjustly, for a variety of economic woes. These problems were usually followed by increased regulation in banking. Once the tough times passed, regulations on banks were usually loosened. As you go through this module, you will have an opportunity to decide and comment on whether or not banks cause economic problems. You will also have the opportunity to suggest changes that could be made in our banking system.
Essential Questions
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- How did America's banking system evolve over time?
- How have regulation and deregulation affected the banking industry?
- What important legislation currently affects banking regulations?
- What are some current trends in financial services?
- What are some of the advantages of diversified financial services?
Key Terms
Central Bank
: government banks that manage and regulate the money supply and other banks
Commercial Bank: provide services such as checking and savings accounts, credit cards, and loans
Discount Rate: interest rate a central bank charges a depository institution that borrows from it
District Reserve Banks: Federal Reserve banks in each of the twelve Federal Reserve Districts
FDIC: Federal Deposit Insurance Corporation, A government corporation that insures the deposits of all national and state banks that are members of the Federal Reserve System
Federal Open Market Committee: sets Federal Reserve guidelines regarding purchases and sales of government securities in the open market as a means of influencing the volume of bank credit and money.
Reserve Requirements: set by the Federal Reserve, it is the percentage of deposits that a bank may not loan out and must keep in reserve.
Inflation: a rise in the general level of prices of goods and services in an economy over a period of time
Stagflation: a period of slow economic growth and high unemployment (stagnation) while prices rise (inflation)
Recession: a business cycle contraction, a general slowdown in economic activity over a period of time
Depression: a long-term economic state characterized by unemployment and low prices and low levels of trade and investment
Spread: the difference between what a bank pays in interest and what they receive in interest
Regulation: Regulation is a principle, rule, or law designed to govern or control conduct, particularly in business.
Deregulation: Deregulation is the removal of a rule or law designed to control conduct, especially in business.
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