Modern Banking System Concepts

The video explores the evolution of the U.S. banking system from using gold to modern digital reserves. Initially, gold was deposited in banks, and certificates were issued for trade. However, issues arose with trust and convenience in the full reserve system. The modern banking system, using fractional reserves and digital transactions, offers a more trusted, convenient, and uniform approach, supporting a growing economy.

What was the main topic of discussion in the introduction of lesson three?

• The evolution of the U.S. banking system

• The concept of digital currency

• The history of gold as money

• The role of the Federal Reserve

In the historical context, what did Alice and Bob use to represent their gold deposits?

• Credit cards

• Paper money

• Bank certificates

• Digital tokens

What was a major issue with the full reserve banking system?

• Difficulty in transporting gold

• Over-reliance on digital transactions

• Inability to issue credit

• Lack of gold reserves

Why did Bob hesitate to accept Charlie's bank certificates?

• He didn't like Charlie

• He didn't trust Charlie's bank

• He had no use for more gold

• He preferred digital transactions

What system replaced the full reserve banking system?

• Cryptocurrency

• Gold standard

• Barter system

• Fractional reserve banking

What is the role of the Federal Reserve in the modern banking system?

• To issue gold certificates

• To regulate cryptocurrency

• To print paper money

• To act as a bank's bank

How are transactions handled in the modern banking system?

• By moving physical gold

• Through digital reserves

• Using paper certificates

• Via barter exchanges

What ensures trust in the modern banking system?

• Physical gold reserves

• Uniform digital numbers

• Paper money

• Personal relationships with bankers

What was a key benefit of moving to digital reserves?

• Easier and more convenient transactions

• Increased gold reserves

• Elimination of all banking fees

• Direct transactions between individuals

What does the modern banking system support?

• A smaller economy

• A larger and growing economy

• Only international trade

• Only local transactions