What is an authorized bank?

In general, an authorized bank is any financial institution that has received a specific permission from its government in the form of a charter for business and money transactions. Chartered Banks provide retail and commercial financial services, unlike more systemic ones carried out by central banks. Chartered Banks are considered to be the backbone of the developed world financial infrastructure, moving money, extending the loan and providing liquidity that supports everyday commercial activity.

There are a number of adjectives associated with banks that mean different things in different countries and can be easily fooled. In the US, the term chartered bank applies to both state and national banks. Almost all state banks in the US are rented by their state governments, with the support of federal deposits (FDIC), a body that guarantees the availability of money stored. National banks are rented by the currency administrator. State or National Bank in turn can function as commercial BAnka or as a reserve bank.

practically unique in the world, in the US, some state banks can be reserve banks , which means they are part of the Federal Reserve System, a central bank of the country. This means that these banks are involved in monetary policy and lending money to commercial banks and the government itself, instead of simply retail customers. In most other countries, the reserve bank is a different entity from the state passing bank. Most other countries, however, have roughly similar institutions for rent and insurance of deposits as the US.

Chartered Bank earns most of its income by investing and earning interest on the money people put with them. This applies to a reserve or commercial authorized bank. In most countries, there are laws that require the bank to be at hand at hand at all times. This is to prevent what is known as run onThe bank in which a natural disaster or other unforeseen situation, which causes most investors to withdraw their money at once.

One of the causes of the big economic crisis was in fact that many US banks were cash to meet withdrawals after cash market in Black Friday in 1929. With literally no money available, many banking patrons were left without savings and no way to get it. It was a primary factor to create a FDIC that provides money invested in the participating bank. In the US there is only a handful of banks that are not members of FDIC.

and Credit Union can also be considered a type of authorized bank. Although it is not a bank in the strictest technical sense, a credit union must obtain a state or a federal charter in order to perform operations. In the US, these organizations have a similar institution as FDIC, known as National Credit Union Share Fund .