These are credit creation theory, fractional reserve theory and debt intermediation theory..
They are (1) the credit creation theory until about 1930, (2) the fractional reserve theory until about 1970, and (3) the financial intermediation theory since then..
Despite their collective power, however, each individual bank is considered to be a mere financial intermediary, gathering deposits and lending these out, without the ability to create money.
The credit creation theory, in line with the fractional reserve theory, maintains that the banking system creates new money..
They are the following: ,receiving deposits of various kinds, lending money or creating credit, issuing cheques, honouring cheques and collecting cheques
These are the essential functions of a bank
However, these definitions do not include ,any agency and general utility services rendered by modern bankers
In Davidson Vs Barclays Bank Ltd
, the banker of a bookmaker had dishonoured a cheque for a small sum of £ 2-l5 sh by mistake
Taking into account his business and the amount of the cheque, he was awarded a special damage of £ 250
Another special feature of the relationship existing between a banker and his customer is that a banker can exercise the right of lien on all goods and securities entrusted to him as a banker
lien is the right of a person to retain the goods in his possession until the debt due to him has been settledEven though this practice came into vogue as early as in 1868 in Hardy Vs
Veasey, it was firmly rooted only in 1924 in a leading case, popularly known as Tournier’s case (Tournier Vs
National Provincial and Union Bank of England Ltd
)In the above case, the banker had disclosed to a third party the customer’s connection with bookmakers
Pseudohistory of RMS Titanic
Pseudohistory of RMS Titanic
