Money and Banking

Syllabus tag: KCSE | Business Studies | Form 4 | Topic 25 Money and Banking

Lesson objectives

By the end of this topic, you should be able to:

• State the characteristics and functions of money.
• Explain the motives for holding money and the supply of money.
• Describe commercial banks, their accounts and services.
• Describe the central bank and its instruments of monetary policy.

Summary

Money is anything generally accepted as a medium of exchange. It solves the problem of barter, which required a double coincidence of wants. People hold money for transactions, precautionary and speculative motives. Commercial banks accept deposits and lend, creating money in the process, and the central bank controls the money supply.