Commercial Banking

A commercial bank is a bank whose main functions are to accept demand deposits and to make short-term loans, chiefly to business firms, thereby facilitating the transfer of funds in the economy. In addition, commercial banks make many other kinds of loans to private individuals, firms, government agencies or to the Government itself. They also issue time and savings deposits and operate trust departments.

Though commercial banks do not issue currency, they do issue money in the form of demand deposits, hence they have the power of creating and destroying money.