Of failure contagion effect after failure of one fi

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of failure (contagion effect after failure of one FI) - Special services provided by FIs - Specific functions e.g. credit allocations (thrifts, farm banks), payment services (banks) Regulatory policy - Protect sources and users of savings - Ensure soundness of overall system Balance sheet - Assets = Liabilities + Capital - Invest liabilities to into assets to create value - Transaction Accounts/Non-transaction accounts Repurchase agreement sale of securities with promise to buy back - Repurchase price > sale price Bank capital source of funds by owners Assets cash (inc. reserves), securities, loans OBS loan commitments, letters of credit - Important to manage and measure OBS risk
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