The article, “ What Will 2020 Hold for Banking and Financial Services, ” by Rene Hendrikse, explores the evolution of financial services in United States over the last decade, and gives several points on the importance of critical differentiators for financial and banking institutions. According to Hendrikse (2020), within the last one-decade, financial services have transformed tremendously rendering banking institutions more useful and transforming their models to fit the contemporary financial and banking environment.
In American history, banks are among the oldest businesses that have existed. The banking systems holds a vital role in the financial systems as the largest, oldest, and most essential industries that disseminate financial functions to the U.S citizens ( Hendrikse, 2020 ). Banks are crucial for cooperation of numerous economic functions, most of the money stock belonging to United States residents is actually bank money. Guse & Brasfield (2020) argue that confidence in bank money results from the fact that people can exchange it at the bank or using ATMs for legal tenders. Besides, banks and financial institutions are obliged to making legal tender reserves that allow people to exchange money when in need of the service.
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For constant supply of sufficient money to keep the United States economy functional, measuring of money is essential as it determines the amount of money in people’s pockets and that in form of checks and credit cards. According to Hendrikse (2020), measuring money also determines the liquidity of people’s cash stacked in financial institutions and banks. The United States Federal Reserve Bank, also known as U.S central bank, is responsible for regulatory measures that include monetary policies defining money in liquidity form. The liquidity is measured in two forms, M1 and M2. M1 refers to extra liquid moneys that include checkable deposits and cash, while M2 entails all monies liquid in nature, M1, deposits certificates, time deposits and money market funds ( Marshall, 2021 ). With the M1 and M2 categorizations, it is easier for the U.S federal bank to measure total available moneys.
The evolution of United States currency traces back to historical times in 1975 when the revolutionary war became inevitable, prompting the congress to allow issuance of currency that would finance the ongoing conflict. The first continental currency was rolled out in form of Spanish Milled Dollars which became operational up to 1861 when the government issued paper money ( Hendrikse, 2020 ). The treasury also allowed numerous banks to print and circulate the rolled-out paper currency under state charters. Later in-between 1863 and 1929, the government permitted the issuance of national bank notes after which the federal reserve system was established to offer regulatory services and protect the U.S currency by monitoring the money supply chain. The institution was also given powers to create and destroy U.S money.
References
Guse, E., & Brasfield, D. W. (2020). A Generalized Exposition of Money Creation in the Money and Banking Course. The American Economist , 65 (2), 244–263. https://doi.org/10.1177/0569434519891974
Hendrikse, R. (2020). What Will 2020 Hold for Banking and Financial Services? Forbes Magazine . Retrieved 29 March 2021, from https://www.forbes.com/sites/renehendrikse/2019/11/29/what-will-2020-hold-for-banking-and-financial-services/?sh=3ef0d29b6238 .
Marshall, T. (2021). Measuring Money: Currency, M1, and M2. In A. Marshal, Principles of Economics (p. n.p). Openstax. Retrieved 31 March 2021, from https://opentextbc.ca/principlesofeconomics/chapter/27-2-measuring-money-currency-m1-and-m2/.
