1、Unit 7Text:Money and Banking （货币与银行）1.Key words2.What is money?3.The functions of money4.Characteristics of money5.Banks and bank deposits6.Bank lending and creation of credit7.Bank deposits and savings8.Questionsnotes and coinsBartered goodsmedium of exchangestore of valueliquid assethire purchasec
2、redit cardpay the billbusiness transactiondeferred paymentpaper moneycommercial bankingidle depositsmake loansmake paymentredeemable notescheque accountinterest-bearing depositssavings accountbook entriesMoney can be anything which is commonly offered or received for the sale of goods or to pay for
3、services.Money can be any good or asset which is readily acceptable in a community in exchange for goods and services.3.1 Medium of exchange3.2 Store of value3.3 Measure of value3.4 Standard of deferred paymentMoney allows people to avoid the problem of the barter system by removing the need for two
4、 people to find each other when both want to exchange their goods for those of the other.Money can be stored and spent later on.If prices remain stable,money is a good store of value because it is a liquid asset;that is,it can be used immediately if needed.Money is a convenient way to measure the va
5、lue of goods.If everything has a price,people can compare the price of one good with another,and readily make choices on which they want to buy.Deferred payment means that payment is to be made at a later date,or by installments over a period of time.If prices remain stable,money as a means of defer
6、red payment works well.4.1 Divisibility4.2 Portability4.3 Durability4.4 AcceptabilityMany goods used for barter cannot easily be divided into small units.Money in coin or paper form comes in a number of denominations of varying value,and can be used to buy large expensive items as easily as small on
7、es costing only a few cents.Another necessary characteristic of money is the ease with which it can be carried about,ready for use.If money is to be used effectively as a store of value it must not deteriorate physically through use over time.Gold and other metals were originally the obvious choice
8、for such purposes as they do not perish or deteriorate with the passing of time.Paper money when handled frequently becomes torn and dirty,but it is periodically recalled and replaced.For money to function as a means of exchange it must be in a form which is accepted by the community concerned.Whate
9、ver form it takes,people must be willing to exchange it for goods and services;they must have confidence in it and consider it to have a value.To be acceptable,money must also be controlled by a central body which restricts its supply and manufactures it in a form that is difficult to counterfeit or
10、 copy.The history of commercial banking is believed to have begun in Italy.Originally,banks acted as safe deposits or caretakers for peoples wealth.As well as taking money from a depositors account to pay to one of his creditors,the bank could also use the idle deposits to make loans to its own clie
11、nts,subject to the payment of interest.The original deposit was still held to the credit of the owner,but a loan was made from it.The loan would eventually find its way back to the bank,thus making a second deposit.The second deposit could now be used in the same way.The banks had therefore created
12、money.As the banking system developed,loans were made from a deposit which had been made in hard cash,and the loans resulted in new notes or new deposits.This led to a great expansion of commerce.The whole essence of money creation rested on the assumption that depositors and noteholders would not a
13、ll come to the bank at once,but only in small numbers,allowing the bank time to pay.If all came at once,the bank could not pay and this would cause a bank to fail.Cheque accounts are called current accounts.No interest is paid on these accounts,and the depositors pay fees to the bank for operating t
14、heir accounts.A bank deposit is a sum of money which the bank owes to the person depositing it.It is nothing tangible,just an entry in the banks books to say that the bank owes that sum to that person.Cheques are an instruction to the banker to pay,out of the account of the person or business signing the cheque,the amount specified to the recipient specified.(1)What is money?What characteristics does money need to have?(2)What are the three important functions of money?(3)What are the functions of a bank?
