Banks stand very important in the financial system because they create loans which then make money for businesses and individuals to spend.
<h3>What is the purpose of banks?</h3>
Banks stand very important in the financial system because they create loans which then make money for businesses and individuals to spend. Banks can create their profit when they acquire interest from the loans they make. Their activities exist monitored by the Federal Reserve which stands for the central banking system of the United States.
The way that banks earn profit exists via banking fees and interest payments on the loans they convey out.
Individuals would utilize a bank to save their money.
Businesses can use banks to obtain loans to expand their business.
The Federal Reserve stands as the central bank of the United States.
When there exists more money in supply, businesses and individuals will have more money to spend on goods and services. The reverse exists true.
Banking concerns money supply by increasing the amount of money in circulation when they make loans.
Without banks, we wouldn't include loans to buy a house or a car. We wouldn't control paper money to buy the things we require.
