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5. Bank Organization

Banks are among the most important financial institutions. The way in which a bank is organized and operates is determined by its objectives.

A central bank accepts responsibility for advising the government to make the country's financial policy, issues national currency and regulates money supply. The aim of commercial bank is to earn profits.

Over the years banks have developed organizational forms, or structures to perform their various roles and to supply services to their customers demand.

Many banks offer the combination of wholesale and retail banking. Wholesale banking provides services to companies and other banks; the retail ones mainly provide services to public (individuals).

Typically a bank consists of some divisions. At the heard of it there are Chief Administrative Officers including the Board Chairman and the President, who are elected by the shareholders and are responsible for the efficient management of the bank.

Then come different divisions:

Lending division which deals with commercial and consumer loans;Accounting and Operations division which consists of Accounting and Audit departments and Operations subdivision dealing with check clearing, posting, account verification, and customer complaints;

  • Fund-Raising and Marketing division dealing with tellers, new accounts,advertising and planning;

  • Trust division consisting of Personal Trusts and Business Trust subdivisions.

There is often close contact between top management and the management and staff of each line division. Such banks present a relatively low-risk working environment and place the banker close to the customer and give the bank employees the opportunity to see the results of their work.

6. Money and Currency

Money is a medium of exchange. All values in the economic system are measured in terms of money. It is anything that is accepted as a payment for goods or services. It may be pieces of gold or silver, sheets of printed paper (bills or GB notes), shells, stones, cattle, or anything else that is regarded as a legitimate basis of exchange for something else.

Money differs from cash. Cash is a form of money that consists of paper currency and coins. So, currency is money in use in a country. Currency is usually backed by gold and silver. National currency is «backed» by the store ofgold which the government maintains (gold standard). Nowadays national currencies are considered to be as strong as the national economies which support them. For example, today our Ukrainian currency «hryvnia» (UAH) has value only because the Ukrainian government stands behind it.

The work of a bank centres around money and financial services. The immediate service offered by the bank is the receipt for deposit of coins, bills (notes), and checks and the cashing of checks, through current accounts. Coins and notes in circulation have the status of 'legal tender', that is to say they must be taken in different payments.

But most money is not in the form of cash. It is in the form of demand deposits, which is money held in checking (GB current) accounts. Almost all businesses and most families keep the money they need to pay their bills in a bank checking account. Then, instead of cash, they use checks (GB cheques) to pay their bills. A check is a piece of paper that orders a bank to give the payee aspecified amount of money. Checks, credit cards, and money orders are not legal tender. They perform the function of substitute money and are known as «instruments of credit». A credit card gives you possibility to buy goods or services without using cash or a check.

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