Banks are closely concerned about the flow of money in to and out of the 【M1】______
economy. They often cooperate with governments by efforts to stabilize economies 【M2】______
and to prevent inflation. They are specialists in the business of providing
capital. Banks originated as places in which people took their valuables for safe- 【M3】______
keeping, but today the great banks of the world have many functions in
addition to acting as guardians of valuable private possession.
Banks normally receive money from their customers in two distinctive 【M4】______
forms: on current account, and on deposit account. With a current account, a
customer can issue personal cheques. No interest is paid by the bank on this
type of account. With a deposit account, therefore, the customer undertakes 【M5】______
to leave his money in the bank for a minimum specific period of time. Interest 【M6】______
is paid on this money.
The bank in return lends the deposited money to customers who need 【M7】______
capital. This activity earns interest for the bank, and this interest is almost
always at a higher rate than any interest which the bank provides to its 【M8】______
deposits. In this way the bank makes its profit.
We can say that the primary function of a bank today is to act for an 【M9】______
intermediary between depositors who wish to make interest on their savings,
and borrowers who wish to obtain capital. The bank is a reservoir of loanable
money, with streams of money flowing in and out. For this reason,
economists and financiers often talk of money being "liquid", or of the
"liquidity" of money. Many small sums which might not thus be used as 【M10】______
capital are tendered useful simply because the bank acts as a reservoir.
【M1】