Definition of Central Bank, Commercial Bank and Their Functions (Complete)
Definition of Central Bank, Commercial Bank and Their Functions (Complete) – Savings are a very valuable treasure for everyone in this world because savings will be able to give us comfort and peace in the future.
Not only that, savings can also be used when we experience an unwanted event, such as an object or an accident. Therefore saving is very important and it is better to save it in a bank to make it safer.
Definition of Central Bank, Commercial Bank and Their Functions (Complete)
Savings that are saved in the bank will be much safer, but not only used for saving, there are other uses that can be carried out by the bank. In order to understand what a central bank and a commercial bank are, we will explain as follows:
Definition of Central Bank
The central bank is a financial institution that is owned by the state which is given responsibility for regulating and supervising all kinds of activities related to financial institutions and can guarantee that various activities related to these financial institutions can create a level of economic activity stably.
Central Bank Functions
Central banks can generally print and also circulate banknotes or coins. The government gives power to the central bank to be able to print money, a task that is provide this to ensure sufficient cash is available and provide a seamless payment pathway efficient.
The central bank can maintain reserves at commercial banks, this has the aim of being able to regulate the volume of money has been circulating and to be able to facilitate the payment process, namely with a system called the system cleaning.
The central bank is the cash holder and financial adviser to the government. Not only that, this bank can save government money and can also assist in launching various government financial activities by assisting receipts and payments.
Definition of Commercial Banks
A commercial bank is an institution in the financial sector that can accept deposits or deposits from the public or broad depositor to be paid upon request and also provide credit and services into payment traffic or circulation Money.
According to Law no. 10 of 1992, concerning banking, defines a commercial bank as a bank that can carry out business activities with conventional methods or those based on sharia principles in their activities can provide services in one-way traffic payment.
Functions of Commercial Banks
Commercial banks such as central banks have the following functions:
Can provide a variety of services to be able to expedite or facilitate the passage of money payments. Not only that, commercial banks can also function to provide facilities in expediting and facilitating a payment in payment traffic.
Can collect a budget of funds that are temporarily available to be borrowed from other parties or can be purchased securities.
Commercial banks that apply are commercial, which means they can be used and will try to be able to collect funds from people who will wait temporarily unemployed or unused which later these funds will be used to be able to provide credit loans to other parties who are indeed need.
Here's an explanation about Definition of Central Bank, Commercial Bank and Their Functions (Complete) explained by knowledge. With a bank, we can easily save safely and comfortably. Hopefully useful 🙂
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