MONEY AND CREDIT

There are several methods of payment and they are provided by BANKS and POST OFFICES.

The safer and more convenient methods of payment provided by post offices include:

Postage stamps

Postal order (vaglia postale a taglio fisso)

Money order (vaglia postale

Telegraphic money

Postal giro (c/c postale)

The principal instrument of credit issued by banks are:

Cheques assegno

Bank drafts (assegno circolare)

Traveller's cheques (assegni per viaggiatori)

Bills of exchange cambiale

Promissory notes pagherò

Letters of credit (crediti documentary)

Bank transfers bonifico bancario

Cheques- it's composed in three parts: the drawer (traente), the drawee (trattario), the payee (beneficiario). Cheques can be classified in:

Order cheque- (assegno all'ordine) payable to a specified person or negotiable by endorsment.

Bearer cheque- (assegno al portatore) payable to bearer.

Crossed cheque- (assegno sbarrato) payable into a banking account.

Open cheque- it can be either an order or a bearer cheque.

Only a person who has a current account at a bank can draw a cheque and he must insert in it the date, the payee's name, the amount in words and figurers and the signature.

Bills of exchange- it's an order to pay and a negotiable instrument of credit. A bill requires acceptance that is essential.

There are three kinds of acceptance: general, partial, qualified.

The parties to a bill of exchange are three: the drawer, the drawee, the payee. The drawer makes out the bill, the drawee is the person to whom the order is addressed and the payee is the person to whom it is payable.

The tenor of a bill is the period between the date of the bill and its maturity.

The date of payment can be

At sight

At fixed date

At a certain time after sight

At a certain time after date

The place can be: inland or foreign.

Promissory note- it's a negotiable instrument of credit. It's a promise to pay a certain sum of money at  fixed time or to the order. It has only two parties: the maker and the payee.

Letter of credit- it's an arrangement between a bank in country and a correspondent bank in another country authorizing payment to the beneficiary of a sum of money. It is the most used methods of payment in foreign trade because it is easy and safe for the exporter. It safeguards the exporter against the risk of non payment, delay in payment, in fact the exporter is paid as soon as the goods have been dispatched and the document presented to the bank concerned. These documents are the shipping documents and they are the invoice, the certificate of origin, the insurance policy and the bill of lading or air waybill.

Other instrument of credit

Bank draft- (assegno circolare) it is an unconditional order to pay on demand or to order of a specific person, or to bearer. It is considered to be as good as cash.

Traveller's cheques- they are used by travellers abroad to avoid carrying about large sums of money.

Bank transfers- they are simple methods of transferring funds from the bank account of a buyer to the bank account of a seller.

THE BRITISH BANKING SYSTEM

Banking is a fundamental branch of commerce. They offer different services: investment schemes, borrowing and lending money, foreign exchange, etc.

There are five main types of banks in Great Britain:

The bank of England

The commercial banks

The saving banks

The merchant banks

The building societies

The Bank of England is the central bank of the country and the Government's banker.

Its functions are:

To control the country monetary policy

To help the financial system to operate efficiently.

It:

Is responsible for the issue of banknotes;

Holds the gold reserves;

Advises the Government on financial affairs;

Controls credits;

Serves as banker for the other banks.

To control credit the Bank of England uses the bank rate. It is the rate at which the bank rediscounts bills of exchange or lends money to the other banks. The Bank of England has two separate departments:

The Issue department which issue notes;

The Banking department which provide service to the Government and the other banks and does not deal with the general public.

The Commercial Banks- they offer all kinds of services to both individuals and business companies. The banks in this group are the so called big four: HSBC Midland, Lloyds TSB Group, Barclays and National Westminster.

The Savings Banks- they provide a wide range of banking services but their main function is accepting money on savings account and pay interest on it.

The Merchant Banks- they lend money to companies and deal in international finance. Much of their business is concerned with the acceptance or negotiation of bill of exchange and payment in foreign trade.

Building Societies- they are financial institutions which accept and pay interest on deposits and lend money to people who are buying properties. They also provide a wide range of saving schemes to investors.

Services of Banks- Banks provide a variety of services for private clients, businessmen and firms.

Borrowing money- accepting money on current account or on deposit account.

Lending money- it is a fundamental function of the commercial banks and the most profitable of its activities. Banks lend money to both private and business customers in the following ways:

By overdraft (fido);

By loan account (apertura di credito in conto corrente);

By discounting bill of exchange (spese di sconto di cambiali).

Assisting overseas trade- they provide methods of payment for overseas trade. Miscellaneous services: (advising customers on investment. Collecting interest, dividend.. assisting travellers abroad).

THE USA FEDERAL RESERVE SYSTEM

The FED is the central banking authority of the country. It is responsible to Congress and operate in contact with the Department of the treasury. The FED is a system of banks controlled by a Board of Governors in Washington D.C. consisting of seven members appointed by the President and confirmed by the Senate; they have the function of control the operate of the FED. The country is divided into 12 Federal Reserve Districts with a Federal Reserve Bank in it. The main functions of the FED are: to regulate the nation's monetary policy and issue the country's paper currency.