BANKING SYSTEM IN THE CZECH REPUBLIC
The first banks and their ancestors (money changers and goldsmiths) provided operations with coins (conversion, authenticity checking, coin metal content, safekeeping). The aim of present banks seems to be quite different because of the development of production relation. The main task of present banks is to operate as financial institutions providing bank loans; moreover, the banks ensure relatively safe opportunities for optimal investments of available investors´ finances. In market economy it is possible to identify many banks which are included into the banking system. The banking system includes all banking operations carried out in the country and also includes mutual relations of these banks. It also takes in lawful orders, rules and procedure.
There are several types of banking systems:
One Stage Banking System – all banks can be engaged in all banking operations (commercial ones and money issue. This system was typical for centrally planned economies in 20th century when just one bank existed (The Czechoslovak State Bank in the CR – former Czechoslovakia).
Two Stage Banking System is the most frequent model. The first stage is the central bank (bank of issue) and the other one is formed by commercial banks. The origins of two stage banking system were found in 17th and 18th centuries when money-issue activities were concentrated into particular banks.
However the banking system seems to be one of the most state-controlled sectors in market economies: State supervision is executed by the central bank (bank of issue) or Ministry of Finance.
The banking system can follow two theoretical models:
Universal Banking Model – commercial banks are involved in banking activities and can also provide investment operations as share dealing.
Separate Banking Model is based on the separation of commercial and investment bank. This model is typical for the UK and the USA.
2. BANKING SYSTEM IN THE CZECH REPUBLIC
In the CR there was one stage banking system by the end of January 1990. It was represented by the Czechoslovak State Bank (SBČS) with their state bank subsidiaries in regional and district towns and cities. Since 2nd January 1990 a new two stage banking system has been operating.
The banking system is a two-stage system and consists of:
Central Bank (Bank of Issue) – its role is executed by the Czech National Bank (ČNB) with the seat in Prague. The Czech National Bank is a central uthority in the Czech banking sector.
Commercial Banks have been operating in many cities and towns in the Czech Republic. They represent an executive role of the two stage banking system. They provide a huge variety of banking services for their clients (natural persons and legal entities).
2.1. Czech National Bank
For details, see www.cnb.cz.
2.2. Commercial banks
A commercial bank is a type of financial intermediary and a type of bank. It raises funds by collecting deposits from business and consumers via checkable, saving and time or term deposits. It provides loans to business and consumers. It also buys corporate and government bonds. Its primary liabilities and assets are deposits and loans or bonds, respectively.
This is what people normally call a "bank". The term "commercial" was used to distinguish it from an investment bank. Since the two types of banks no longer have to be separate companies, some use the term "commercial bank" to refer to banks focused mainly on companies.
For details on Czech commercial banks, see the following websites: