What does MFI stand for?
Monetary financial institution
What is an MFI?
Another term for DTI
Why are DTIs subjected to stricter regulation than NDTIs?
Monetary function of deposits - affects money supply
Are deposits discretionary or contractual?
Discretionary
Are pension & insurance payments discretionary or contractual?
Contractual
What is a universal bank?
Combines commercial activities with activities of investment bank, securities house & insurance firm
What activities might a universal bank do?
- Portfolio management
- Brokerage of securities
- Underwriting
- Mergers & acquisitions
What are drawbacks of universal banking?
- Mis-selling investment products to get commission fees e.g. PPI
- Risky proprietary trading & market-making
What are benefits of universal banking?
- Economies of scale & scope
- Smoothed performance is good for financial stability
What are a bank’s core actitvities?
- Payment services
- Deposits & loans
- Trade finance / cross-border services
- Other financial services
What is a payment system?
Any organised arrangement for transferring value between participants
What are types of payments?
- Cheques
- Bank transfers
- Card payments
What are the advantages of cashless payments for customers?
- Cheaper, faster, more secure
- Easier to track payments
- Easier to build credit history
What are the disadvantages of cashless payments for customers?
- Bad spending habits
- Privacy issues
- Fraud risk
What are the advantages of cashless payments for society?
- Environmentally friendly
- Reduction in crime & tax avoidance
- Supports economic activity
- Increases financial inclusion for some
What are the disadvantages of cashless payments for society?
- IT risks & cyber-attacks
- Harms communities / high streets
- Lack of coordination -> inefficiencies
- Reduces financial inclusion for some
What are the main types of deposit & lending services?
- Current accounts
- Time / savings deposits
- Consumer loans & mortgages
What is fintech?
Any innovative use of technology in financial services
What are the three levels of fintech?
- Fintech activities e.g. asset management
- Enabling technologies e.g. cloud computing
- Policy enablers e.g. data protection
