The foreign exchange market, which is a decentralized platform is used all over the world in order to carry out currency trades. Usually, the international banks are involved in such transactions. These transactions or currency trades are intermediated by financial institutions, also known as banking institutions.
Types Of Banking Institutions:
There are three basic types of banking institutions that intermediate financial trades. These 3 types of institutions are as follows:
- Depository- These banking institutions take or accept deposits from different agencies and other personnel. The task of managing these deposits is also performed by these depository institutions. Credit unions, mortgage loan companies, trust companies and other banks make deposits into these institutions. These institutions also make important loans.
- Investment Institutions– These are banking institutions that make the required investments. They are usually well aware of the market statistics and carry out effective risk analysis. Investment banks and brokerage firms are common examples.
- Contractual Institutions– These institutions are in charge of pensions, insurances and other related funds.