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How government policy affect US banking system? - Essay Example
Finance & Accounting
Pages 4 (1004 words)
Government policies and its effects on the US banking system Name: School: Government policies and its effects on the US banking system Banking and bank regulation are among the major elements that have shaped the development of the US and the US financial model…
The demand-deposit control has turned banks into the middle agents and the principal agents in the US payment system and the financial transactions taking place. The costs and the benefits of banking regulation include the major industry changes witnessed that include internet and electronic banking; data processing models improved communication; and the development of more complex risk management and financial instruments (Graig, 1983). Government policy on the banking sector determines the outlook of the banking system, influencing the entry of players in the system and determining who is capable of engaging in the banking business. The policy definitions offer guidance on who can operate a bank, which services can be traded, and models of expansion that can be employed by banks. Banking regulation in the US increases the protection offered to depositors (Ambrose, Michael, & Anthony, 2005). This adjusted effect came after the government recognized that increasing numbers were conducting their business through banks, and deposits of businesses and individuals were increasing. Banking regulations imposed the improvement of financial and monetary stability. This was introduced in reaction to the recognition that there was an increasing level of transactions and businesses carried out among businesses and individuals (Spong, 2000). ...
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