The UK Banking System

Abstract

Banks play a vital role in the economy. They predominate in the provision of money through their deposits; they are the principal institutions responsible for the circulation of the rest of the money supply, i.e. notes and coin; and, above all, they provide the means whereby resources are transferred from those who have a surplus to those in industry and commerce who can use them productively. They also provide safe and convenient payments mechanisms, both internally and internationally. Fully to understand the importance of these functions we shall have to study the banking system in detail, but before doing so it is desirable that we should determine what is meant by a bank, and then look at the broad picture of the banking system as a whole.