An institution, such as a bank, building society, or unit-trust company, that holds funds from lenders in order to make loans to borrowers.
- To do this, it enters into a forward contract with a financial intermediary (usually a commercial bank) which now assumes the foreign exchange risk for a commission.
- This refusal will make their notes less liquid and therefore discourage financial intermediaries from making these loans in the first place.
- In a natural system of money production, banks would grant credit only as financial intermediaries.
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