Understanding Central Banks, Commercial Banks and Their Functions (Complete)

Understanding Central Banks, Commercial Banks and Their Functions (Complete) – Savings is a very valuable asset 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.

Understanding Central Banks, Commercial Banks 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 done by the bank. In order to understand what a central bank and commercial bank are, it will be explained as follows:

Definition of Central Bank

The central bank is a financial body owned by the state which is given the responsibility for regulating and supervising all kinds of activities related to financial institutions and can ensure that various activities regarding these financial institutions can create a level of economic activity steadily.

Central Bank Functions

The central bank in general can print and also circulate banknotes or coins. The government gave the central bank the power to print money, a task that provide this to ensure the availability of sufficient cash and be a trajectory for payment efficient.

The central bank can maintain reserves at commercial banks, this has the aim of being able to regulate the volume of money that has been circulating and to be able to facilitate the payment process, namely with a system called the system cleaning.

The central bank becomes the cash holder and becomes the financial advisor to the government. Not only that, this bank can save government money and can also assist in launching various government financial activities by helping with receipts and payments.

Definition of Commercial Bank

Commercial bank is an institution in the financial sector that can accept deposits or deposits originating from the public or broad depositors to pay on demand 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 by conventional methods or those based on sharia principles in their activities can provide services in one-way traffic payment.

Commercial Bank Functions

Commercial banks such as central banks have the following functions:

Can provide various services to facilitate or facilitate the flow of money payments. Not only that, commercial banks can also function to provide facilities in facilitating and facilitating a payment in payment traffic.

Can collect a budget of funds that are temporarily held for loan to other parties or which can buy securities.

Commercial banks that apply are commercial in nature which means they can be used and will try to be able to collect funds from the public who will benefit temporarily unemployed or unused, which later the funds will be able to use to be able to provide credit loans to other parties who really are need.

That's the explanation about Understanding Central Banks, Commercial Banks and Their Functions (Complete) explained by about knowledge. With a bank we can easily save safely and comfortably. Hope it's useful