Discussion 1
Financial intermediaries are financial institutions that provide services such as borrowers, lenders, investors and simple depositing products. The most popular financial intermediaries are banks, credit unions, investment banks, thrift institutions, life insurance companies, casualty insurance companies, and federal agencies. (http://www.subjectmoney.com/definitiondisplay.php?word=A%20List%20and%20Explanation%20of%20Different%20Types%20of%20Financial%20Intermediaries)
This is where transactions from suppliers with capital complete an exchange to receive a benefit from the institution. A perfect example will be a simple savings account. The financial institution is willing to hold the money with a percentage paid to the account holder. (.nasdaq.com/investing/glossary/f/financial-intermediaries”>http://www.nasdaq.com/investing/glossary/f/financial-intermediaries)
Along with that being said the financial intermediaries that hold deposits have government insurance known as FDIC (Federal Deposit Insurance Corporation). This is to insure the funds of every depositor up to $250,000 per account in the incident of the institution failing. (Mishkin 47) Every financial intermediary is very restricted they want to confirm to every client that their funds are safe and meets all the clients obligations.
Financial intermediaries are very important to the economy because it serves many of purposes. Such as providing a safe keep, diversification, investments, liquidity, for everyone to park the funds for the near and/or far future. Investment banks are one of the intermediaries that are used for the far future. Individuals currently place a lump sum of money in a diversified portfolio to increase the chance of profit. (Mishkin 45) There is the SEC (Security Exchange Commission) that is to protect the investors by maintaining a fair, orderly and efficient market and facilitate capital formation. Stocks and bonds are extremely popular to every investor and it is available in institutions such as banks, insurance companies, mutual funds, and investment banks. This money increases the flow along with the affect of the everyday flow of the economy. This actually has an affect of the flow of business profits, production of goods and services and the countries status in the financial markets. NADAQ is the National Association of Securities Dealers it began about forty years ago. This was and is created for investors to buy and sell stocks on a computerized, transparent fast system. In February 1971 the NASDAQ (National Association of Securities Dealers Automated Quotation went live in over 2,500 over the counter securities. This creation was invented for everyone to complete the easy success of electronic trading. (http://www.nasdaqomx.com/aboutus/company-information/whatisnasdaq)
Mortgages are always the topic of discussion; banks are very popular for selling mortgages to homeowners. The homeowner cannot ever afford to purchase a home without completing a mortgage. The bank or mortgage broker agent then reviewed by the underwriters submits the loan. These underwriters have to make sure all of the restrictions, policies and procedures are followed before approving this clients application. The policies and procedures are enforced by the mortgage brokers but created by the following: fair housing act, home mortgage disclosure act, equal credit opportunity act, real estate settlement procedures act, secure and fair enforcement act, regulation Z- truth in lending act, fair credit reporting act, credit policy, record retention, unfair deceptive and abusive acts and practices, information safeguard and privacy policies, identity theft red flags policy. (.com/?page_id=2929″>https://mortgage-u.com/?page_id=2929) These acts and policies are to protect the person or persons who are purchasing a home. These acts are all used in every institution.
The interesting financial intermediary is the credit unions. As per the definition credit unions are small non-profit depository institutions that are owned by their members who are also their customers. (.subjectmoney.com/definitiondisplay.php?word=A%20List%20and%20Explanation%20of%20Different%20Types%20of%20Financial%20Intermediaries”>http://www.subjectmoney.com/definitiondisplay.php?word=A%20List%20and%20Explanation%20of%20Different%20Types%20of%20Financial%20Intermediaries)
The FDIC for up to $100,000 also insures these credit unions only. They have liabilities such as checking and savings, investments and short-term consumer loans such as car loans and credit cards. The difference between the credit unions and banks are the restrictions the loans made for the consumers, bonds requirements and that the credit unions are non- profit, meaning they are tax exempted.
Foreign currency is important in this world between individuals travelling and business doing business out the country. First and for most, foreign currency is money or currency that is used in other countries outside of the country that the purchaser currently live in. Every country has its own currency such as Europe has Euros, Argentinian Peso, Australian Dollar, Canadian Dollar, Chinese Yuan, Danish Kroner, Hong Kong Dollar, Israeli Shekel, Russian Ruble, New Zealand Dollar, South African Rand, Vietnamese Dong, Thai Baht, Swiss Franc and there is many more. When purchasing foreign currency there is a rate that is involved in it. The rate is the exchange rate between the U.S dollars and the foreign currency such as Canadian Dollars. Most rates have an increase added to the rate because it is subject to a fee for the institution that is being purchased from.
(.travelex.com/US/Products/Foreign-Currency/”>http://www.travelex.com/US/Products/Foreign-Currency/)
This is what makes many individuals keep the cash flow at a high from country to country. There are many other ways that foreign currency is involved with out ever thinking about it. Such as completing wire transfers to others like a business or an individual that is currently has an account at a different institution in a different country. Like sending some money overseas the person sending the money will need to have the bank information such routing number, account number, bank swift code and the receivers name and address. When it is sent internationally is may be sent in U.S dollars or in the currency that it is currently going too. The bank representative that will normally complete this will explain to the initiator that the funds can be sent as foreign currency or it can be converted when the receiver receives the funds but it might me a fee depending on the institution that it will be receiving it.
So with everything listed and explained above as an individual we have many options that are available to us. This is what really explains how and why money is very important to every one and every business. This is the most important to the economy without money we really do not have anything no matter where and how the money is being made or used as long as it is legitimate. Kristin
