7 Transactions Of A Bank

Front 1

Transaction 1: Creating a Bank

Back 1

Stocks are sold to bank personnel and the general public. They all have a share in the bank. The bank now has cash on hand.

Front 2

Transaction 2: Acquiring Property and Equipment

Back 2

The Board of Directors invest in property and equipment. The bank has less cash on hand but has assets in property.

Front 3

Transaction 3: Accepting Deposits

Back 3

Banks accept deposits and make loans. They act as a liability for the bank.

Front 4

Transaction 4: Depositing Reserves in a Federal Reserve Bank

Back 4

Banks are required to keep required reserves set by law. They can keep cash in the bank, but primarily in the Federal Reserve.

Front 5

Transaction 5: Clearing a Check Drawn Against the Bank

Back 5

Banks send its checks to the Federal Reserve; the Fed then sends cleared checks to the appropriate banks.

Front 6

Transaction 6: Granting a Loan

Back 6

Banks can offer interest-based loans. Banks receive a Promissory Note in exchange for lending cash. Banks will only lend equal to the amount of excess reserves.

Front 7

Transaction 7: Buying Government Securities

Back 7

Banks can buy government bonds. These are like the opposite of giving loans.