What is a float in a banking system?

Float is the money in a bank that has usually been credited to the bank, but not the customer. Let’s assume a bank as an incoming payment of $100,000. Instead of crediting it out to the customer, the bank can keep it for one extra day and earn interest on it. Almost every country has a system […]

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How did large money transfers happen before banks and coinage?

Before banks per se, there weren’t any large transfers. Wealth or value was transferred either through property title deeds or goods being bartered. There wasn’t much of a need to do transfers of money (in those days money was gold, silver, and other precious metals, plus prized commodities). Unless of course one was looting everything […]

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Are national and commercial banks the same?

Pretty much. National banks are commercial/retail banks (depending on the country) except they are owned or majority owned by the Government. Nothing more, and nothing less. Their product offering is the same as any other commercial banks. It is just that the government has more (or complete ownership) of these banks. Prioritizing them to handle […]

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Are international banks as strict as banks in the US?

If it involves US Dollar clearing, then the answer is yes. They are quite strict and if your bank that does US Dollar clearing is not strict, consider it a blessing. Most international banks are not as uptight and strict as the US Banks. However, when it comes to competing landscapes, then banking is quite strict. Allow […]

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Will Ripple dominate cross border payments transfer market worldwide?

Hard to say. At the time of writing this answer, Ripple (payment network) has about 200 or so banks signed up. A pretty small number, but much more than any other alternative provider out there, that just got started in the last few years. With over 15,000 banks microfinance banks, credits unions, community banks, etc., some put […]

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How do traditional banks respond to the rise of challenger banks?

They basically have four avenues of approach with respect to the rise of challenger banks. Buy them out. Most challenger banks will merge or become part of a larger group and may operate independently, etc. Incumbent banks have a lot of money, power, pull, institutional memory, etc. that can be a huge asset to these challenger […]

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