describe+the+functions+of+central+banks,+stock+exchanges,+commercial+banks;

This section of the syllabus is covered in Chapter 6 of the textbook. Basically students need to know the functions of these institutions- in other words- what do they do?

financial institutions:Organisations that provide financial services to their customers. The customers could be individuals or businesses.

The Role of a Central Bank This is covered clearly on pages 92-93. Read this section and make notes. How successful have central banks been recently in regulating the behaviour of commercial banks?

External link to this topic: []

Commercial/Retail/High-street Banks These are all the same thing. Basically they accept deposits/savings from customers and lend this money to other customers in the form of loans Task: copy the diagram on P81 in the textbook. How do banks make a profit?

Commercial banks should not be confused with Investment banks such as Goldman Sachs and Morgan Stanley. Investment banks provide services for large businesses and Governments such as helping them raise finance through issuing shares. You would get a lot of blank stares if you tried to open a savings account or get a personal loan from Goldman Sachs. Investment banks are not mentioned anywhere in the IGCSE syllabus, so don't worry too much about them.

Task: Turn to P84 and make notes on the different types of accounts, methods of payments and loans available

The Stock Market:

This market is no different to any other market, in that it is a place that brings together buyers and sellers. In this case it is the buyers and sellers of company shares. The sellers of shares are initially the companies themselves who issue the shares in an IPO (initial public offering-or a floatation). This is also known as "going public" as it involves issuing shares to the public. The companies are called Public Limited companies (PLCs). However often the sellers of the shares are people who initially bought the shares and now wish to sell them (hopefully at a profit!). Without the stock market or stock exchange firms may find it difficult to sell their shares. <span style="font-family: 'Trebuchet MS',Helvetica,sans-serif; font-size: 16px;">For more information turn to p87-88 and make additional notes. <span style="font-family: 'Trebuchet MS',Helvetica,sans-serif; font-size: 16px;">THINK <span style="font-family: 'Trebuchet MS',Helvetica,sans-serif; font-size: 16px;">Which important stock exchange is missing from the list on p87. Why?

<span style="font-family: 'Trebuchet MS',Helvetica,sans-serif; font-size: 16px;">For a more up to date list follow this link: <span style="font-family: 'Trebuchet MS',Helvetica,sans-serif; font-size: 16px;">[]

<span style="font-family: 'Trebuchet MS',Helvetica,sans-serif; font-size: 16px;">Extension Activity: Watch the video below and note the different types of products that people can save their money in. Shares are not the only form of financial product available. Government bonds are how governments borrow money. Don't worry though if you don't understand this, is not in the IGCSE syllabus, but it is something you may take an interest in, later in life.

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