Bank From Wikipedia, the free encyclopedia Jump to: navigation, search For other uses, see Bank (disambiguation). "Banker" redirects here. For other uses, see Banker (disambiguation). "Bankers" redirects here. For the economics book, see The Bankers. This article has multiple issues. Please help improve it or discuss these issues on the talk page. • It needs additional references or sources for verification.Tagged since July 2008. • It may require general cleanup to meet Wikipedia's quality standards. Tagged since June 2010. 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A bank connects customers with capital deficits to customers with capital surpluses on the world's open financial markets. • a savings bank, also known as a building society in Britain is only allowed to borrow and save from members of a financial cooperative Banking is generally a highly regulated industry, and government restrictions on financial activities by banks have varied over time and location. The current set of global bank capital standards are called Basel II. In some countries such as Germany, banks have historically owned major stakes in industrial corporations while in other countries such as the United States banks are prohibited from owning non-financial companies. In Japan, banks are usually the nexus of a cross-share holding entity known as the keiretsu. In Iceland banks followed international standards of regulation prior to the 2008 collapse. The oldest bank still in existence is Monte deiPaschi di Siena, headquartered in Siena, Italy, and has been operating continuously since 1472.[1] Contents [hide] • 1 History ○ 1.1 Origin of the word • 2 Definition • 3 Banking ○ 3.1 Standard activities ○ 3.2 Channels ○ 3.3 Business model ○ 3.4 Products 3.4.1 Retail 3.4.2 Wholesale • 4 Risk and capital • 5 Banks in the economy ○ 5.1 Economic functions ○ 5.2 Bank crisis ○ 5.3 Size of global banking industry • 6 Regulation • 7 Types of banks ○ 7.1 Types of retail banks ○ 7.2 Types of investment banks ○ 7.3 Both combined ○ 7.4 Other types of banks • 8 Challenges within the banking industry ○ 8.1 United States ○ 8.2 Competition for loanable funds • 9 Accounting for bank accounts ○ 9.1 Brokered deposits • 10 Banking by country • 11 See also • 12 References • 13 External links [edit] History Main article: History of banking Banking in the modern sense of the word can be traced to medieval and early Renaissance Italy , to the rich cities in the north like Florence, Venice and Genoa. The Bardi and Peruzzi families dominated banking in 14th century Florence, establishing branches in many other parts of Europe.[2] Perhaps the most famous Italian bank was the Medici bank, set up by Giovanni Medici in 1397.[3] The earliest known state deposit bank, Banco di San Giorgio (Bank of St. George), was founded in 1407 at Genoa, Italy.[4] [edit] Origin of the word The word bank was borrowed in Middle English from Middle Frenchbanque, from Old Italianbanca, from Old High Germanbanc, bank "bench, counter". Benches were used as desks or exchange counters during the Renaissance by Florentine bankers, who used to make their transactions atop desks covered by green tablecloths.[5] The earliest evidence of money-changing activity is depicted on a silver Greek drachm coin from ancient Hellenic colony Trapezus on the Black Sea, modern Trabzon, c. 350–325 BC, presented in the British Museum in London. The coin shows a banker's table (trapeza) laden with coins, a pun on the name of the city. In fact, even today in Modern Greek the word Trapeza (Τράπεζα) means both a table and a bank. [edit] Definition The definition of a bank varies from country to country. See the relevant country page (below) for more information. Under English common law, a banker is defined as a person who carries on the business of banking, which is specified as:[6] • conducting current accounts for his customers • paying cheques drawn on him, and • collectingcheques for his customers. Banco de Venezuela in Coro. In most common law jurisdictions there is a Bills of Exchange Act that codifies the law in relation to negotiable instruments, including cheques, and this Act contains a statutory definition of the term banker: banker includes a body of persons, whether incorporated or not, who carry on the business of banking' (Section 2, Interpretation). Although this definition seems circular, it is actually functional, because it ensures that the legal basis for bank transactions such as cheques does not depend on how the bank is organised or regulated. The business of banking is in many English common law countries not defined by statute but by common law, the definition above. In other English common law jurisdictions there are statutory definitions of the business of banking or banking business. When looking at these definitions it is important to keep in mind that they are defining the business of banking for the purposes of the legislation, and not necessarily in general. In particular, most of the definitions are from legislation that has the purposes of entry regulating and supervising banks rather than regulating the actual business of banking. However, in many cases the statutory definition closely mirrors the common law one. Examples of statutory definitions: • "banking business" means the business of receiving money on current or deposit account, paying and collecting cheques drawn by or paid in by customers, the making of advances to customers, and includes such other business as the Authority may prescribe for the purposes of this Act; (Banking Act (Singapore), Section 2, Interpretation). • "banking business" means the business of either or both of the following: 1. receiving from the general public money on current, deposit, savings or other similar account repayable on demand or within less than [3 months] ... or with a period of call or notice of less than that period; 2. paying or collecting cheques drawn by or paid in by customers[7] Since the advent of EFTPOS (Electronic Funds Transfer at Point Of Sale), direct credit, direct debit and internet banking, the cheque has lost its primacy in most banking systems as a payment instrument. This has led legal theorists to suggest that the cheque based definition should be broadened to include financial institutions that conduct current accounts for customers and enable customers to pay and be paid by third parties, even if they do not pay and collect cheques. [8] [edit] Banking [edit] Standard activities Large door to an old bank vault. Banks act as payment agents by conducting checking or current accounts for customers, paying cheques drawn by customers on the bank, and collecting