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100
Explain the five perceived problems with the Dual banking system.
1) No centralized control
1) No centralized control
Basically there was no national banking system, just a bunch of other banking systems.
More specifically, there was no Lender of last resort or clearinghouse. A Lender of last resort is someone who lends to a bank when it doesn't have enough money to pay out depositor's demands for their money back. A clearinghouse is basically a place that clears balances between banks when they are all connected to one another. Without one, each transaction/check has to be cleared individually with the banks involved. So no clearinghouse means its difficult for banks to cash checks (for gold and silver).
More specifically, there was no Lender of last resort or clearinghouse. A Lender of last resort is someone who lends to a bank when it doesn't have enough money to pay out depositor's demands for their money back. A clearinghouse is basically a place that clears balances between banks when they are all connected to one another. Without one, each transaction/check has to be cleared individually with the banks involved. So no clearinghouse means its difficult for banks to cash checks (for gold and silver).
Flashcard info:
Author: savhighsmith
Main topic: Economics
Topic: History of Economics
School / Univ.: UGA
City: Athens
Published: 12.10.2010