Trade . Money And Banks- Writer- Moshiur Rahman

Trade, Money and Banks

Writer- Moshiur Rahman

In ancient times, people live in jungle, hunt and manage living. They do all activities in a group. There was no sense of self. With course of time, they learned to hunt individually and share the excess amount with fellows. After some days, they start to exchange things rather than just giving. As the concept gets matured, the existence of money comes to vision. To reduce spending and time, people begin to gather at the same place to execute thing exchanging activities known as trade. This is how civilization gets.

Seller- the person who intends to sell

Buyer - the person who wants to purchase

Market- The place where this exchange is executed

Product- The goods which have be exchanged

Price- The trade-off point between the buyer and seller

Demand- buyer need

Supply- making availability of the good by seller

With the course the time, the prime concept remains the same but the complexity and arena of trade. Gradually, its spreads from individual of countries, When execution of business involves distant places other important question arises. Mainly,

a. the security of payment to seller

b. the safe transit or transshipment of goods to buyer.

c. Who will carry the risk?

We can also here tell briefly about the role of bank. After the organization of money, the units in the society arises,

1. The surplus unit

2. The deficit unit

The surplus unit has still savings after satisfying all expenses. On the other hand, the deficit portion of the society looks out for somebody else for debt as its spending was more than the income. The surplus unit generally rents its extra amount of money to deficit unit with some cost known as income for the savers. But the process was absolutely cumbersome and inefficient as a sound matching of suitable debtor and creditors was tough and lengthy. To address this need, the perception of bank comes to horizon. Bank is the third party which will act as a safeguard of money of the surplus unit and make arrangement to lend the money to deficit unit in exchange for premium from bank will earn itself and give back greater amount to the saver as the reward for them.

Now the question is how banks get involved in trade. As the complexity and expansion of the cross border trade, the risk, fraud and mishandling of money also increase. It was also difficult for the buyers and sellers to monitor themselves these activities. Then banks come forward to take control. Since banks are everywhere, buyers and sellers start to approach their own bankers and authorize them to transfer fund and even take control of goods. Now a day, banks serve to

a. Transfer fund

b. Document handling

c. Undertaking risk

d. Control the goods

Thus, international trade is executed by only some clicks of computer keyboards within seconds, thanks to the wisdom of the human being who also pursue to be better and excellent.

In a legal system, it is supposed to flow all the legal money through banks. Banking channels are like blood veins and money like blood cells which flow through the veins. if anyway veins are disrupted, the whole flow system interrupts. Likewise , problem in baking system or channel must jeopardize the complete free movement of money , resulting in dire consequence for both the surplus and deficit unit of the society and halting of production , closing of industries, unemployment, famine, humanitarian crises which may take decades to get back to normalcy again. That is why a prominent saying is that    “banks are more dangerous than standing armies"