Il sistema bancario inglese
Coins and paper notes are used for general business. When big sums of money are involved, substitutes for money are used which are called instrument of credit and are generally handled by Banks.
There are times when the purchasing power af money decrease too much and the prices become higher and higher. This condition is know as inflation, the causes of which are extremely complex and vary form time and place. Banks cooperate with governments to stabilize the economy and prevent inflation.
Originally banks were places to which people took their valuables for safe-keeping, but today they are mainly specialists in the business of providing capitals and allocating funds.
Banks normally receive money from their customers in two distinct forms: on current account and on deposit account. With a current account a customer can issue personal cheques.
When a customer deposits money with a bank, he gets an interest on it. The bank, in turn, lends these deposits to customers who need capital. Customers have to pay a high rate of interest is the main source of profit for the bank. Therefore the bank is a reservoir of loanable money with streams of money flowing in and our.
There are different kinds of banks: Commercial Banks, Savings Banks and Central Banks. Commercial Banks act as intermediaries between persons who have money to save and person who want to borrow it.
The Biggest commercial banks are: Lloyds and Martin, the Westminster and National Provincial and the Middland Bank which have branches all over the country.
Savings Banks are those whose chief funcion is to accept money from the general public.
Central Banks are banks of issue, which means that they have the sole right to issue banknotes. The Bank of England and the Bank of Scotland are banks of issue.
The Bank of England was founded in 1694 on the suggestion of William Paterson in order to raise funds needed by the king for war exponses.
Later in the bank was given the sole right of joint stock banking and consequently it became the most powerfil bank in the country. Since 1884 it has had the sole right to issue banknotes for England and Wales. The Bank of Scotland issues banknotes for Scotland. The Bank of England was nationalized in 1946. It is divided into two departments: the issue department and the banking department.
The Bank of England, in cooperation with the Treasury, plays an important role in regulating expansion or contraction of credit. In fact when an expansion of credit is desirable, the Bank rate become lower. On the contrary, when a contraction of credit is necessary, for istance when inflation occurs, the Bank rate becames higher.
The Bank of England also controls the monetary policy of the country through the "open market operations". When the Bank wishes to bring about an expansion of credit it buys Treasury Bills or Government Stocks which will be bought by other Commercial Banks.