NUMBER ONE Success System

Tommy Lee noss1233 at
Thu Aug 23 11:00:32 GMT 2007

Role in the money supply

A bank raises funds by attracting deposits, borrowing money in the
inter-bank market, or issuing financial instruments in the money market or a
capital market. The bank then lends out most of these funds to borrowers.

However, it would not be prudent for a bank to lend out all of its balance
sheet. It must keep a certain proportion of its funds in reserve so that it
can repay depositors who withdraw their deposits. Bank reserves are
typically kept in the form of a deposit with a central bank. This behaviour
is called fractional-reserve banking and it is a central issue of monetary
policy. Note that under Basel I (and the new round of Basel II), banks no
longer keep deposits with central banks, but must maintain defined capital
ratios.[*citation needed*]

Size of global banking industry

Worldwide assets of the largest 1,000 banks grew 15.5% in 2005 to reach a
record $60.5 trillion. This follows a 19.3% increase in the previous year.
EU banks held the largest share, 50% at the end of 2005, up from 38% a
decade earlier. The growth in Europe's share was mostly at the expense of
Japanese banks whose share more than halved during this period from 33% to
13%. The share of US banks also rose, from 10% to 14%. Most of the remainder
was from other Asian and European countries.[*citation needed*]

The US had by far the most banks (7,540 at end-2005) and branches (75,000)
in the world. The large number of banks in the US is an indicator of its
geography and regulatory structure, resulting in a large number of small to
medium sized institutions in its banking system. Japan had 129 banks and
12,000 branches. In 2004, Germany, France, and Italy had more than 30,000
branches each—more than double the 15,000 branches in the UK.[1]
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