Exchange Bank
Exchange banks are financial institutions that specialize in foreign exchange transactions and services. They facilitate currency exchange for individuals, businesses, and governments, allowing them to convert one currency into another. These banks play a crucial role in the global economy by providing liquidity in the foreign exchange market and helping to facilitate international trade and investment.

Limitations of Exchange Banks
1. Regulatory Restrictions: Exchange banks are subject to strict regulations and oversight by government authorities. These regulations can limit the types of services they can offer and the countries they can operate in.
2. Exchange Rate Risks: Exchange banks are exposed to fluctuations in exchange rates, which can impact their profitability. They need to carefully manage their currency positions to mitigate these risks.
3. Competition: Exchange banks operate in a highly competitive market, with many players vying for market share. This competition can put pressure on profit margins and force banks to constantly innovate and improve their services.
4. Market Volatility: The foreign exchange market is highly volatile, with exchange rates constantly fluctuating due to various economic and geopolitical factors. This volatility can make it challenging for exchange banks to accurately predict future exchange rates.
5. Counterparty Risks: Exchange banks face counterparty risks when dealing with other financial institutions or clients. These risks include the possibility of default or non-payment, which can have a significant impact on the bank's financial stability.
In conclusion, while exchange banks play a crucial role in facilitating international transactions and providing essential foreign exchange services, they also face a number of limitations and challenges. It is important for these banks to carefully manage their risks and adapt to changing market conditions in order to remain competitive and sustainable in the long run.