1.
Central bank
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A central bank, reserve bank, or monetary authority is an institution that manages a states currency, money supply, and interest rates. Central banks also usually oversee the commercial banking system of their respective countries, Central banks in most developed nations are institutionally designed to be independent from political interference. Still, limited control by the executive and legislative bodies usually exists, prior to the 17th century most money was commodity money, typically gold or silver. However, promises to pay were widely circulated and accepted as value at least five hundred years earlier in both Europe and Asia. The Song dynasty was the first to issue generally circulating paper currency, in 1455, in an effort to control inflation, the succeeding Ming Dynasty ended the use of paper money and closed much of Chinese trade. The Bank of Amsterdam, established in the Dutch Republic in 1609, is considered to be the forerunner to modern central banks. The Wisselbanks innovations helped lay the foundations for the birth and development of the banking system that now plays a vital role in the worlds economy. Along with a number of local banks, it performed many functions of a central banking system. Lucien Gillard calls it the European guilder, and Adam Smith devotes many pages to explaining how the bank guilder works, the model of the Wisselbank as a state bank was adapted throughout Europe, including the Bank of Sweden and the Bank of England. Established by Dutch-Latvian Johan Palmstruch in 1668, Sveriges Riksbank is often considered by many as the worlds oldest central bank, the lenders would give the government cash and also issue notes against the government bonds, which could be lent again. A Royal Charter was granted on 27 July through the passage of the Tonnage Act 1694, the bank was given exclusive possession of the governments balances, and was the only limited-liability corporation allowed to issue banknotes. The £1. 2M was raised in 12 days, half of this was used to rebuild the Navy and these modern central banking functions evolved slowly through the 18th and 19th centuries. The currency crisis of 1797, caused by panicked depositors withdrawing from the Bank led to the government suspending convertibility of notes into specie payment. The bank was accused by the bullionists of causing the exchange rate to fall from over issuing banknotes. Nevertheless, it was clear that the Bank was being treated as an organ of the state, henry Thornton, a merchant banker and monetary theorist has been described as the father of the modern central bank. An opponent of the real bills doctrine, he was a defender of the bullionist position, thorntons process of monetary expansion anticipated the theories of Knut Wicksell regarding the cumulative process which restates the Quantity Theory in a theoretically coherent form. Until the mid-nineteenth century, commercial banks were able to issue their own banknotes, many consider the origins of the central bank to lie with the passage of the Bank Charter Act of 1844. Under this law, authorisation to issue new banknotes was restricted to the Bank of England, at the same time, the Bank of England was restricted to issue new banknotes only if they were 100% backed by gold or up to £14 million in government debt
2.
Cooperative banking
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Cooperative banking is retail and commercial banking organized on a cooperative basis. Cooperative banking institutions take deposits and lend money in most parts of the world, Credit unions have the purpose of promoting thrift, providing credit at reasonable rates, and providing other financial services to its members. They are typically the smaller form of cooperative banking institution, in some countries they are restricted to providing only unsecured personal loans, whereas in others, they can provide business loans to farmers, and mortgages. Larger institutions are often called cooperative banks, some are tightly integrated federations of credit unions, though those member credit unions may not subscribe to all nine of the strict principles of the World Council of Credit Unions. Like credit unions, cooperative banks are owned by their customers and follow the principle of one person. Unlike credit unions, however, cooperative banks are regulated under both banking and cooperative legislation. They provide services such as savings and loans to non-members as well as to members, many cooperative banks are traded on public stock markets, with the result that they are partly owned by non-members. Member control is diluted by these outside stakes, so they may be regarded as semi-cooperative, Cooperative banking systems are also usually more integrated than credit union systems. Local branches of cooperative banks select their own boards of directors and manage their own operations, Credit unions usually retain strategic decision-making at a local level, though they share back-office functions, such as access to the global payments system, by federating. Some cooperative banks are criticized for diluting their cooperative principles, principles 2-4 of the Statement on the Co-operative Identity can be interpreted to require that members must control both the governance systems and capital of their cooperatives. A cooperative bank that raises capital on public stock markets creates a class of shareholders who compete with the members for control. In some circumstances, the members may lose control and this effectively means that the bank ceases to be a cooperative. Accepting deposits from non-members may also lead to a dilution of member control, the special banks providing Long Term Loans are called Land Development Banks, in the short, LDB. The history of LDB is quite old, the first LDB was started at Jhang in Punjab in 1920. This bank is based on Co-operative. The main objective of the LDBs are to promote the development of land, agriculture, the LDBs provide long-term finance to members directly through their branches. Building societies exist in Britain, Ireland and several Commonwealth countries and they are similar to credit unions in organisation, though few enforce a common bond. However, rather than promoting thrift and offering unsecured and business loans, borrowers and depositors are society members, setting policy and appointing directors on a one-member, one-vote basis
3.
Credit union
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Credit unions operate alongside other mutuals and cooperatives engaging in cooperative banking, such as building societies. Natural-person credit unions serve individual people, as distinguished from corporate credit unions, Credit unions see themselves as different from mainstream banks, with a mission to be community-oriented and serve people, not profit. Normally, only a member of a union may deposit or borrow money. Surveys of customers at banks and credit unions have consistently shown a significantly higher customer satisfaction rate with the quality of service at credit unions, Credit unions have historically claimed to provide superior member service and to be committed to helping members improve their financial situation. In the context of financial inclusion credit unions claim to provide a range of loan. In the credit union context, not-for-profit is not the same as for a charity or similar organization. Credit unions are not-for-profit because their purpose is to serve their members rather than to maximize profits. But, unlike charities and the like, credit unions do not rely on donations, and are financial institutions that must perforce make what is, in economic terms, a small profit to remain in existence. According to the World Council of Credit Unions, a credit unions revenues must exceed its expenses and dividends in order to maintain capital. F. W. Raiffeisen wrote in 1870 that credit unions are, according to eleven of the German law of cooperatives. They accordingly form a sort of business enterprise of which the owners are the Credit Unions members. In the United States, credit unions incorporated and operating under a credit union law are tax-exempt under Section 501. Federal credit unions organized and operated in accordance with the Federal Credit Union Act are tax-exempt under Section 501, according to the World Council, at the end of 2014 there were 57,480 credit unions in 105 countries. Collectively they served 217.4 million members and oversaw US$1.79 trillion in assets, the European Association of Co-operative Banks reported 38 million members in those four countries at the end of 2010. The countries with the most credit union activity are highly diverse, several African and Latin American countries also had high credit union membership rates, as did Australia and South Korea. He went on to develop a successful urban credit union system. In 1864 Friedrich Wilhelm Raiffeisen founded the first rural credit union in Heddesdorf in Germany, by the time of Raiffeisens death in 1888, credit unions had spread to Italy, France, the Netherlands, England, Austria, and other nations. The first credit union in North America, the Caisse Populaire de Lévis in Quebec, Canada, drawing extensively on European precedents, Desjardins developed a unique parish-based model for Quebec, the caisse populaire
