Pls do not handwrite the answer, this is for easy reading Question:- 1a) Explain
ID: 2621310 • Letter: P
Question
Pls do not handwrite the answer, this is for easy reading
Question:-
1a) Explain the role of intermediation in the financial markets and the benefits it brings to the economy with respect to each of the following institutions:-
1ai) commercial bank
1a ii) mutual fund
1b) Analyse the potential for disintermediation or disruption for the above institutions brought on by technology.
1c) Explain what type of foreign exchange rate regime Singapore has adopted and analyzed how it differs from that of the USA.
Explanation / Answer
1a. Financial Intermediary is a firm or an institution that acts as an intermediary between provider of service and of consumer
There are two main roles of intermediary in the intermediation process : Borrowers and Savers. Borrowers include individuals, company and government. All three need to borrow money. Savers have money which is why the are also called lenders.
1ai. Commercial Banks :
Assets Storage : They provide storage for cash as well as othet assets such as precious metals. .
Providing Loans.: They provide loans that help customers to purchase buildings, automobiles, machinery and other items.
1aii. Mutual Funds :
Investment : Mutual Funds are intermediaries that are set up to help clients increase assets through investments.
1b) Technology is upending workflow and processes in financial service industry.
FINTECH - Financial technology is an umbrella term describing disruptive technologies in financial services.
The blockchain is the wild card that could completely overhaul financial services.
1c) Singapore Foreign Exchange Rate Regime is MANAGED FLOAT REGIME.
USA Foreign Exchange Rate Regime is FLOATING EXCHANGE REGIME. ..
In the Managed Float Regime of singapore, the current international financial environment in which exchange rates fluctuate from day to day but central banks attempt to influence their countries exchange rates by buying and selling currencies while in USA, floating exchange rate is used that is a regime where currency price is set by the forex model based on supply and demand compared with other currencies.