Banking System - BM/2015/195

Financial intermediary is the organisation which acts as a link between the investor and the borrower, to meet the financial objectives of both the parties. These can be seen as business entities who accept deposits and  investments  from the depositors or investors (lenders) by providing them low interest on their sum; and further lends this amount to the individuals and firms (borrowers) at a comparatively high rate of interest to make their margin. The two of the significant roles played by the financial intermediary in the economy are the creation of funds and governing the payments system. Types of Financial Intermediaries There are a number of financial intermediaries formed to serve the different aims and objectives of the customers or members or lenders and borrowers. These entities are explained in detail below, Banks : The central and commercial banks are the most well known financial intermediaries simplifying the lending and borr...

The Central Bank of Sri Lanka (CBSL) is the apex institution in the financial sector in Sri Lanka. It was established in 1950 under the Monetary Law Act No. 58 of 1949 (MLA) as a semi-autonomous body and is governed by a five member Monetary Board.In the 1st post I have posted about the History of the Central Bank of the Sri Lanka.(  Beginning of the Banking of Sri Lanka  ) The CBSL seeks to achieve and maintain two core objectives to maintain a healthy and stable economic and financial system while maximising resource utilisation effectively. These objectives are: 1. The maintaining of economics and price stability 2. The maintaining of financial system Stability    The MLA has also granted the CBSL sole authority to issue currency notes and coins to the public. Therefore, the Bank is responsible for currency issuance and management . The CBSL is advisor on economic affairs and Banker to the Government of Sri Lanka (GoSL). As agent to GOSL the CBSL is t...

Beginning of the Currency... Barter System  A barter system is an old method of exchange. This system has been used for centuries and long before money was invented. People exchanged services and goods for other services and goods in return. The necessity of the currency was mainly occurred due to the disadvantages of this barter system.  Disadvantages of Barter System Double Coincidence of Wants Absence of Common Measure of Value Lack of Divisibility The Problem of Storing Wealth Difficulty of Deferred Payments Problem of Transportation Due to these reasons people who were live in the past had to find a alternative to overcome this advantages. As a result, Currency was introduced to the world. Let's see the Currency-used in Sri Lanka...  Sri Lanka is a country that has a long history as well as its History of the currency also very long history. So Sri Lanka’s currency-used can be divided into following periods. 1.      Anuradhapur...