Functions of modern banks

Modern banks perform a wide range of functions, including:

1. Accepting Deposits: Banks accept deposits from individuals and businesses, which can be withdrawn as and when required.

2. Lending Money: Banks provide loans and credit facilities to individuals and businesses for various purposes, such as purchasing a house, starting a business, or buying a car.

3. Issuing Credit and Debit Cards: Banks issue credit and debit cards to their customers, which can be used to make purchases or withdraw cash from ATMs.

4. Providing Investment Services: Banks offer investment services, such as mutual funds, stocks, and bonds, to their customers.

5. Issuing Letters of Credit: Banks issue letters of credit to facilitate international trade between buyers and sellers.

6. Conducting Enquiry Surveys: Banks conduct enquiry surveys to assess the creditworthiness of their customers and to evaluate the risk involved in lending money.

7. Publishing Statistics: Banks publish statistical data on various economic indicators, such as inflation, GDP growth, and unemployment rate.

8. Handling Foreign Exchange Reserves: Banks are responsible for managing the foreign exchange reserves of their respective countries.

Modern banks do not handle foreign exchange reserves

Out of the functions listed above, the function that modern banks do not perform is handling foreign exchange reserves. This function is performed by the central bank of the country, which is responsible for managing the country's monetary policy and maintaining the stability of the currency. The central bank holds the foreign exchange reserves in order to ensure that the country can meet its international obligations and to provide a buffer against external shocks. While commercial banks may deal in foreign exchange transactions, they do not hold foreign exchange reserves as this is the responsibility of the central bank.