M.A.D's Financial Institutions and Their new

8/6/2019 M.A.D's Financial Institutions and Their new

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Submitted to Professor Shahzaib Khan 1

ONEY AND BANKING ONEY AND BANKING

CONCISED PRESENTATION CONCISED PRESENTATION

ONN




UR TEAM

Muhammad Ali Danish

Sharjeel Naveed

Sana Hussain

Ghayas Hasan

Muhammad Ali Awan




:OPICS TO BE COVERED

.1 What is Money and its characteristics?2.

.3 Types of Money?4.

.5 .Financial institutions and their services6.

.7 How money is measured?8.

.9 .State Bank of Pakistan and its functions10.

.11 .Reasons for the change in the financial industry12.

.13 .Identification of the concepts of international financial system

14..15 .International Financial Institutions related to Pakistan16.

.17 .Question and Answer Session18.

19.

20.

21.




hat is money?

M o n e y ,is any object or record that is generally accepted as

p aym en t for

.g oo d s an d services a n d rep ay m en t of d eb ts in a g ive n cou n try

•

• :HARACTERISTICS OF MONEY.) :1 Portab ility It m e an s th a t th e m o n ey sh ou ld b e ea sy to

h a n d le a n d lig h t

.in w e ig h t

.) : ,2 D iv isib ility It sh o u ld b e e a sily d iv id e d in to sm a lle r p a rts

h a vin g fixe d.v a lu e

.) :3 D u ra b ility M o n e y sho u ld h a ve q u a lity th a t it ne ith e r

sh o u ld d ie o r

, .sp o il a n d if sp o ile d it sh o u ld b e re p la ce d e a sily

.) : ,4 S ta b ility M o n ey sh o u ld h a ve a sta b le va lu e an d sh ou ld n o t flu ctu a te




ypes of Money inPakistan?

,On the basis of its course of evolution the money is generally:classified under three main heads they are

§ Metallic money§ Standard money§ Token money

§ Bank money§Cheque

§ Bill of exchange§ Draft

§

§ Paper money§ Representative paper money§ Convertible paper money§ Inconvertible paper money

§




Banks are a financial institution whose primary focus is to make money. The supply or creation of money consists of :

•

• M1 + M2 = M3(Total Money Supply in the economy)

ow money is measured?

– :he Spendable Money Supply M1

PLUS

–The convertible money supply M2

EQUALS

–Total Money supply in the Economy M3




• – :he spendable money M1

q It is measure of money supply that includes only the mostliquid(spendable)

q Consists of Currency + current deposits at banks.

q

• – :he Convertible Money M2q Consists of all components of M1 + the forms of money that can be

• easily converted into spendable forms.

q Examples include:

• 1.) TIME DEPOSITS (like Certificates of deposits issued by bank –DSCs,

• SSCs; Term deposits with bank.)

• 2.) MONEY MUTUAL MARKET FUNDS where short – term, low risk

• financial securities are purchased, like, HBL mutual fund etc.

•

•




q The State Bank of Pakistan is fulfilling the role of Federal

Reserve System.q Federal Reserve system controls the money supply in an

economy.

•

• UNCTIONS OF STATE BANK OF PAKISTAN

•

Banker to the Government: •

a.) Receives deposits (taxes, fees, fines, etc.) on behalf of the federal• government.• b.) Disburses payments (tax refunds, interest, etc.) on

behalf of the• federal government.• c.) Manages the national debt—buys, sells, and cashes

government.• securities and pay interest/profit on them.

tate Bank Of Pakistan




• :anker to Banks ,As banker to the scheduled banks SBP .a Holds deposits made by them as a part of their required

— %reserves 5

.at this time .b “ ”Lends them funds as a lender of the last resort to

meet their pressing needs by discounting their bills of exchange and

.other

• ssuer of Paper Currency

• .xchange Rate Management and Balance of Payment•• o Formulate and Implement the Monetary Policy•• hanging the monetary base .•• xchange Rate Management and Balance of Payment•• cts as a Clearing House•




• Change in the financial industry comesbecause

• of THREE reasons, mainly:•

1. Deregulation of banks.2.•2. Impact of electronic technologies:

a. Introduction of debit cards.b. Credit cards.c. E-cashd. Mobile banking

•

•3. Interstate banking.

•

•

•

HANGE IN THE FINANCIAL:NDUSTRY




• EXCHANGE RATE:

The price at which one currency is bought and sold for another.

Example:

$1 = Rs86/=

£1 = Rs147/=• EXCHANGE RATE SYSTEMS IN PAKISTAN:

•1. Fixed exchange rate system

Government has the right to control the exchange rate

•2. Floating exchange rate system

Market forces of supply and demand for the foreign exchange.

•3. Managed floating system

Floatation until the determination of exchanges rate.

Intervention of the government to control.

DENTIFYING THE CONCEPTS OF NTERNATIONAL FINANCIAL SYSTEM




1.INTERNATIONAL MONETARY FUND

(IMF)•Formed in bretton wood in 1944•Exchange stability•Balanced demand and supply forces

2.WORLD BANK

•Setup in 1947•To make loans to the developing countries

3.ASIAN DEVELOPMENT BANK (ADB)

•Established in 4th decd 1966•To promote investment in the country

4.ISLAMIC DEVELOPMENT BANK

•Formed in 1975 at Jaddeh•Harmonious and balanced development of member countries

5.MULTINATIONAL CORPORATIONS

(MNC’S)•owns and controls productive activities

6.INTERNATIONAL FINANCE

CORPORATION (IFC)•Established in 1956•affiliated organization to World Bank •to provide finance for industrial projects to privateenterprises in developing countries

NTERNATIONAL FINANCIAL INSTITUTIONS’ELATED TO THE PAKISTAN S ECONOMY




THANK YOU

&Question Answer Session

M.A.D's Financial Institutions and Their new

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