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Chapter Eleven: Money, Banking, and Finance What is Money? Figure 11.1: The Liquidity Continuum Liquidity Continuum More Liquid Currency Checking Account Less Liquid Share of Stock Real Estate Precious Metal The Banking System Table 11.1: A Simplified Balance Sheet of a Private Bank Table 11.2: Bank Types Chief Functions Retail Commercial Safekeeping of money; checking accounts; loans Similar to retail bank but more diverse clients including businesses Savings and Loan Similar to retail bank but specializing in loans, particularly mortgages Credit Union Same as a retail bank, but cooperatively owned by customers Private Caters almost exclusively to high net worth individuals; functions extend beyond traditional banking into variety of financial services Investment No traditional banking functions; involved in underwriting and issuing securities, assistance with company mergers and acquisitions, market making, and general advice to corporations Central Overseeing the monetary and interest rate stability of the national economy by directly influencing the money supply
