The international banking system is an enigma.There are more than thirty thousand different banks worldwide on the hold on believable amounts of assets the top ten banks alone.Account for roughly twenty five trillion US dollars Today.Banking can seem very complex but originally the idea was to make life simpler.The eleventh century Italy was the center of European trading merchants from all over the continent meant to trade goods but there was one problem too many currency is in circulation in Pisa merchants have to deal with seven different types of coins and had to exchange them money constantly this exchange business which company took place outdoors on the benches is where we get the word bank from from the word bungled battalion for badge.
The dangers of traveling Counterfeit money and the difficulty of getting a loan call people thinking it was time for new business model home broken started to give credit to businessmen while Genome motions develops cashless payments networks of banks spread all over Europe handing out credit even to the church European kings what about today in a nutshell banks are in the risk management business this Is a simplified version Of the way it works people keep that money in banks and receive A small amount of interest The bank takes this money then then set out that's much higher interest rates it's a calculated risk because some of the vendors Will default on their credit.
This process is essential for our economic system because it provides resources for people to find things like houses bowl for industry to expand their businesses and grow so banks take funds that are unused by say this and turn them into funds Society can use to do stuff Of the sources of income for banks include accepting saving deposits the credit card business buying and selling currencies custodian business and cash management services the main problem with banks nowadays is there's a lot of them have abandoned that traditional role as providers of long term financial products in favor of short term gains the carry much higher risks during the financial group most major banks adopted financial comes Trucks that were barely comprehensible and did their own trading in a bid to make false money and earn their executives and trade is millions in bonuses this was nothing short of gambling and damaged hold economies and societies it's like back in two thousand eight when banks like Lehman Brothers gave credit to basically anyone who wants to buy a house and thereby put the bank in an extremely dangerous risk position this led to the collapse of the housing market in the U. S. and parts of Europe causing stock prices to plummet which eventually led to a global banking crisis and one of the largest financial crises in history hundreds of billions of dollars just evaporated millions of people lost their jobs And lots of money most of the world's major banks have to pay billions in fines And bankers became some of the least trusted professionals the US government and the European Union has put together a huge bailout packages to purchase bad assets And stop the banks from going bankrupt new regulations were put into force to govern the banking business Compose Swed bank emergency funds when forced to absorb shocks in the event of another financial crisis but other pieces of tough new legislation will successfully blocked by the banking lobby to date Of the models of providing financing On gaining ground link new investment banks charge a yearly fee and do not get commissions on sales thus providing the motivation to act in the best interests of their clients.
All credit unions collaborative initiatives that were established in the nineteenth century to circumvent credit jobs in a nut shell they provide the same financial services as banks But focus On Share value rather than profit maximization the self proclaimed goal is to help members create opportunities like starting small businesses Expanding foam old building family homes one investing back into communities.They are controlled by that members who also elect the board of directors democratically.Credit union systems vary significantly ranging from a handful of members to organizations with several billion US dollars and hundreds of thousands of members the focus on benefits for their members impacts the risk credit unions are willing to take which explains why credit unions overload also hurting survived the last financial crisis is way better than traditional banks.
