The Concept of Payment System in Banking

Accepting deposits, making loans, providing liquidity, and facilitating payments.

Through the process of credit creation, where they accept deposits and make loans, thereby increasing the money supply.

BFIs are licensed to accept deposits, whereas NBFIs are not.

<p>To facilitate the flow of funds between savers and borrowers, thereby promoting economic growth and development.</p> Signup and view all the answers

<p>Indirect finance allows for greater flexibility and risk diversification, as it enables savers to invest in a variety of financial instruments.</p> Signup and view all the answers

<p>Through the creation of new money through credit creation and the destruction of money through loan repayment.</p> Signup and view all the answers

<p>To regulate the money supply and maintain price stability in the economy.</p> Signup and view all the answers

<p>Narrow money refers to the most liquid forms of money, such as currency and demand deposits, while broad money includes less liquid forms of money, such as time deposits and savings accounts.</p> Signup and view all the answers

<p>To facilitate the exchange of financial assets, such as stocks, bonds, and currencies, and to provide price discovery and risk management.</p> Signup and view all the answers

<p>By providing alternative sources of finance, such as insurance and investment products, and by promoting financial inclusion and deepening.</p> Signup and view all the answers