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Week 2 Defining Canada

Such activities such as providing loans taking

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Such activities such as providing loans, taking deposits and changing money have been done at banks since ancient Greece. The modern system of banking can be traced to Italy in the Middle Ages. International trade could not have occurred without the banks. Knights Orders like the Templars and the Hospitallers acted as bankers to finance the Crusades. Money could be deposited at one of their castles and a note was given to be redeemed at another, eliminating the need to carry money with you.
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History of Banking Further developed in the Netherlands when goldsmiths would take in gold coins and issue notes based on the value of the coins. People could also issue notes to others allowing them to be paid from their reserves. This was the birth of the cheque. Because these notes were not all redeemed at the same time (and returned to the goldsmiths to receive the coins deposited with them), they would then in turn loan out the coins they had on reserve to make interest off of loans. Fractional Reserve Banking was born.
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History of Banking Any deposit you make at a bank is in a sense a loan to that bank that is repayable on demand. This is why you earn interest on your bank accounts. The bank then takes the money you have deposited and loans it out to others. Bank profits are realized on the difference in interest they pay to you for depositing your money with them and the amount of interest they charge someone to borrow money from the bank.
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History of Banking The problem with Fractional Reserve Banking is that if people lose faith in the bank and try to redeem their notes all at once, the bank is unable to pay. This is because the actual wealth the bank controls is not stored in one physical location, but is dispersed throughout the various borrowers. If everyone tries to get their money out at once, this situation is called a bank run.
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The Bank Run http://www.youtube.com/watch?v=qu2uJWSZk
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The History of Banking In order to protect from this type of occurrence, governments began to create central banks.
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Banking A stable banking system is an absolute requirement for business to thrive in a country. The Stern Diamond has an efficient financial systems as its First Base. The Bank Act of 1871 created a financially sound currency, an absolute requirement for a successful economy, and created a nationally regulated banking system.
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Banking Banks help extend credit (both to consumers and business) that allow them to purchase things they otherwise could not afford. Without credit, how could anyone afford to buy a car? What would that do to our economy? The current global financial crisis can be tied to problems in the banking system. Canada has weathered this crisis better
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Stern Diamond and Early Canada, after the Bank Act of 1871 Where was Canada after the Bank Act of 1871? Did we have non-predatory government? If yes, we are at home plate. Did we have a modern financial system? If yes, we are at first base. Did we have open access and entrepreneurs? If yes, we are at second base. Did we have effective management? If yes, we are at third base.
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Canadian Banks vs US Banks http://www.youtube.com/watch?v=5o3yDYJUG
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