Banking Abbreviations

The term bank has different uses and meanings. The word can refer to the seat in which several people can sit. The benches, which may or may not have a backrest, are usually used in parks, squares and, obviously, in the home for individual or collective seating. For example: “Let’s sit on that bench that is in the shade, under the tree”, “Let me have a bench, please. I need something from the upstairs closet and I can’t get there.”

The benches can be made of wood, cement, stone, iron, plastic, among other materials. In the past, most traditional benches were made of stone and were attached to the wall of a building. They also made it possible to form the seats that constituted the stands in theaters and circuses.

Bench is also the name of a plank on which carpenters and other craftsmen work, or even the blacksmith’s block.

In another sense, a bank is a financial entity dedicated to the management of money. The bank offers services such as depositing valuables and capital lending. The banking system, also known under the name of banking, is the set of banks that operate within an economy.

The concept of a bank, as a financial institution, began to develop during the Renaissance. Historians claim that the first modern bank was the Banco di San Giorgio, founded in Genoa (Italy) in 1406.

On the other hand , for geology, a bank is an extensive elevation of the sea floor or a river .

In computing, the name of a database is given to the compilation of information on a given topic , stored and processed by a computer, which can be accessed at any time, remotely.

Central Bank

Bank is a term with several meanings. In this case , what matters is the definition of a bank as a financial entity whose function is to manage money. These institutions, which emerged in the Renaissance, provide services such as the loan of capital or the deposit of values.

Central, on the other hand , is said of what belongs to or is relative to the center. This concept can refer to the basics or essentials of something, to the space where coordinated actions converge or to what is in the middle or in the center of something.

The central bank, therefore, is a type of bank that acts as the entity responsible for the monetary policy of a nation or a group of them. Due to its characteristics, this bank operates quite differently from the others: it interacts with the State and with other banks and not with private customers, for example.

In some countries, the central bank is an entity independent of the government of the country to which it belongs. It is a public institution regulated by statutes and laws and whose benefits go to the State.

One of the most important functions of a central bank is the issuance of legal money (in fact, it is the only entity authorized to do so). The central bank is also responsible for managing interest rates (to maintain price stability and safeguard the value of the currency), grant loans to commercial banks or states, safeguard gold and foreign exchange (money) reserves, and advise the government on economic and financial matters.

Commercial Bank

The concept of bank refers to the set of banks and bankers and is used to evoke the entities dedicated to providing and/or facilitating financing.

Commercial is that which pertains to or is related to commerce or merchants. The adjective is also used in reference to what is easily accepted in a particular market .

The notion of commercial bank refers to banks that act as universal operators and that can offer all the services and passive and active operations that they are allowed by law . The commercial bank, therefore, is a type of bank, like the investment bank or the mortgage bank.

The main function of the commercial bank is to intermediate between the supply and demand of financial resources. These banks can receive deposits (or savings) from people and companies (in deposits, fixed terms, etc.) and grant loans and credits. Receiving funds is a passive operation, while borrowing money is an active operation.

The operation of the commercial bank is subject to the specific laws of each country and the rules of each Central Bank. Commercial banks often offer other services, including exchanging (or exchanging) notes and coins, renting safe deposit boxes or collecting taxes.

The distinction between commercial banking and investment banking arises in the wake of the Great Depression, when the US Congress required that banks only carry out traditional banking activities, thus reserving capital market operations to investment banks.

Investment Bank

The concept of a bank admits of several meanings. One of them concerns the set of banks and bankers. The bank (or the bank), therefore, can refer to entities that are dedicated to facilitating financing.

Investment, on the other hand , is an economic concept linked to the placement of capital to earn future income. This means that the investor gives up an immediate profit for a future profit that, although unlikely, in principle, should be higher than the current one. The investment includes three main variables: the expected return (how much money you expect to earn), the risk (how likely there is to obtain the expected gains) and the time (when this gain will be achieved).

An investment bank is any entity specialized in obtaining money or other financial resources so that private companies or governments can make investments. These financial instruments are obtained by the investment bank through the issuance and trading of securities (securities) in the capital markets.

It is customary for the investment bank to also offer consultancy services for the development of acquisitions, mergers or divisions.

Investment banking regulations vary from country to country. As a general rule, the authorities tend to grant special licenses to this type of bank, without them being able to operate simultaneously as commercial banks. That said, the investment bank cannot capture deposits.

The financial crisis that broke out in the United States in 2008 was mainly caused by the failure of many investment banks, such as Lehman Brothers.

List of Acronyms Related to Banking