Banking System

= The banking system in the country

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Evolution of the banking system

Until World War II, numerous banks existed at the European level, but after World War II, many were closed or nationalized and their activities were specialized. State-owned enterprises were subordinated to the Ministry of Finance and the Central Bank. Today, banks are governed by the principles of a market economy.

Types of Banks

Banks are classified according to the scope of their banking license.

[Universal:The most extensive license, with all banking operations (lending, deposits, foreign currency transactions, consulting…)

and can perform all banking services (lending, deposits, foreign currency transactions, consulting…)

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Deposit services banks

Deposit services are banking activities from which banks derive income. Deposits are an important financial resource. These funds are further invested by the bank to generate income.

Types of Deposits

[checking account – primary purpose is not to deposit but to conduct banking business; BOP balances are not stable and therefore do not provide a source of funding for the bank; BOP is not a source of funding for the bank; BOP is not a source of funding for the bank; BOP is not a source of funding for the bank.

Savings – Stable financial resources, voluntary deposits, high interest rates[77]

a) Time deposits – exact deposit and withdrawal dates, early withdrawal with penalty available

b) Accounts with notice periods – periods are specified in the agreement.

Bank Bonds – long-term securities (issued by banks), which are long-term financial resources and a return for the customer

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Certificates of deposit – Marketable securities, which customers purchase from banks at a price below par. At maturity, the customer receives the par value, and the difference between the lower purchase price and the higher par value is interest (taxed at 15%)

The customer receives the par value at maturity, and the difference is taxed at 15%.

[deposit book – traditional way of storing funds, the deposit book must be used to verify deposits and withdrawn if they are to be disposed of.

Time Deposits – are time deposits of a fixed amount and fixed duration (short/medium/long term 4+ years). The deposit is then terminated and the funds must be withdrawn. Automatic renewal of deposits is often offered, but early termination with a penalty is also possible

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[Building Society Savings – Offered by Building Societies. Clients enter into a building savings agreement with a savings bank, with a term of at least six years. Parents can save for their children. The advantage is the valuation (interest) plus government support. Additionally, they may apply for a housing-related loan.

[deposit insurance – A deposit insurance fund has been established to secure deposits consisting of mandatory contributions from banks. Insurance is100% at most, but €100,000.

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