Explain the differences between current and savings accounts, and list three functions of the central bank in Cameroon.

You're on a roll — a) Three differences between current account and savings account deposits: • Purpose: A current account is primarily designed for frequent transactions, such as making payments, receiving salaries, and withdrawing cash, offering high liquidity. A savings account is intended for accumulating funds over time, encouraging saving by typically offering higher interest rates and having fewer transaction facilities. • Interest rates: Current accounts generally offer very low or no interest on deposits, as their main function is transactional convenience. Savings accounts typically offer higher interest rates, rewarding depositors for keeping their money in the account for longer periods. • Withdrawal restrictions: Current accounts usually have no or minimal restrictions on withdrawals and transactions. Savings accounts may have limits on the number of withdrawals or transfers allowed within a certain period without incurring fees, to discourage frequent access and promote saving. b) Three functions of the central bank in Cameroon: • Issuing currency: The central bank has the sole authority to print and issue the national currency (FCFA in Cameroon), ensuring a stable and consistent supply of money in the economy. This maintains public confidence in the currency. • Banker to the government: The central bank manages the government's accounts, processes its payments, and acts as its financial advisor. It also helps the government raise funds by issuing government securities. • Banker to commercial banks: The central bank holds deposits for commercial banks, acts as a lender of last resort to them during liquidity crises, and facilitates interbank payments. This helps maintain stability in the banking system. c) i. Two negative effects of inflation in an economy: • Reduced purchasing power: Inflation erodes the value of money over time, meaning that a given amount of money can buy fewer goods and services. This reduces the real income and living standards of individuals, especially those on fixed incomes. • Uncertainty and reduced investment: High and unpredictable inflation creates economic uncertainty, making it difficult for businesses to plan for the future. This can discourage investment, as firms are unsure about future costs and revenues, hindering economic growth. ii. Two qualities of good money: • Durability: Good money must be able to withstand wear and tear from frequent handling and use without deteriorating. This ensures that it can be reliably used over time without losing its value or physical integrity. • Divisibility: Money should be easily divisible into smaller units without losing its value, allowing for transactions of varying amounts. This facilitates exchange for goods and services of different prices. Got more? Send 'em 📸