Oct/Nov Ban 2601

Question 1: 1. Discount houses - Are the oldest of the money market players; - They play an intermediation role between issuers and consumers of financial instruments; - They are used by the central bank as a communication tool between the Central Bank and Commercial Banks; - Monetary policy issues and interest rates are communicated through DHs. - Central Banks issue instruments like TBs and other government stocks through DHs. 2. Commercial Banks - Banks such as ABSA, Standard Bank, FNB, Nedbank, etc. take deposits from the public and lend the same funds to borrowers. - Risk Transformational role. - Safe keeping role. - Payment role. - Advisory role. - Certification role. - Intermediation role. 3. Merchant Banks - International trade is financed through merchant banks. - Wholesale depositions. - Issue letters of credits and other off-shore funding arrangements. - Parastatals issue bonds and other financial instruments through merchant banks. - Examples of merchant banks in S.A is RMB, Rand Merchant Bank. - They have ability to international credit. - Instruments are normally used to fund the development of infrastructure and major construction projects. 4. Insurance Companies and Investment Banks Question 2: Money Supply MS0 MS