Customize Consent Preferences

We use cookies to help you navigate efficiently and perform certain functions. You will find detailed information about all cookies under each consent category below.

The cookies that are categorized as "Necessary" are stored on your browser as they are essential for enabling the basic functionalities of the site. ... 

Always Active

Necessary cookies are required to enable the basic features of this site, such as providing secure log-in or adjusting your consent preferences. These cookies do not store any personally identifiable data.

No cookies to display.

Functional cookies help perform certain functionalities like sharing the content of the website on social media platforms, collecting feedback, and other third-party features.

No cookies to display.

Analytical cookies are used to understand how visitors interact with the website. These cookies help provide information on metrics such as the number of visitors, bounce rate, traffic source, etc.

No cookies to display.

Performance cookies are used to understand and analyze the key performance indexes of the website which helps in delivering a better user experience for the visitors.

No cookies to display.

Advertisement cookies are used to provide visitors with customized advertisements based on the pages you visited previously and to analyze the effectiveness of the ad campaigns.

No cookies to display.

Skip to content
Home » What are the two main types of banking?

What are the two main types of banking?

In the expansive realm of banking and finance, two primary types of banks shape the financial landscape: commercial banks and central banks. Commercial banks, such as the well-known Bank of America, directly interact with consumers, offering services like savings and checking accounts, loans, mortgages, and more. They are the familiar faces of banking for everyday individuals and businesses, providing essential financial products and services for personal and commercial needs.

On the other hand, central banks function at a higher level within the financial system. These are governmental entities entrusted with overseeing the banking industry and managing the nation’s monetary policy. Unlike commercial banks, which cater to the public, central banks operate behind the scenes, influencing economic growth, inflation, and overall financial stability. Examples of central banks include the Federal Reserve in the United States, the European Central Bank, and the Bank of England.

While commercial banks directly serve customers’ financial needs, central banks play a crucial role in regulating the entire banking sector and steering the country’s economy. They set interest rates, control the money supply, and act as lenders of last resort to stabilize financial markets during times of crisis. Both types of banks are integral parts of the financial ecosystem, working together to ensure a balanced and functional economy.

(Response: The two main types of banking are commercial banks, which directly interact with consumers and provide services like loans and savings accounts, and central banks, which regulate the industry and manage monetary policy.)