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One type of transaction cost is a barrier to communication. When an otherwise perfectly-matched seller and buyer have absolutely zero means of communication, the transaction costs of a deal are too high to be overcome. A bank serves the role of middleman by connecting savings with investments and a prosperous economy justifies the income of the bank for the transaction cost of compiling information and linking parties.

## The Future of Transaction Banking - Oliver Wyman

The future value of a currency is the present value of the currency + the interest that it earns over time in the country of issue. (For a good introduction, see Present and Future Value of Money, with Formulas and Examples.) Using simple annualized interest, this can be represented as:

The Conference of State Bank Supervisors claim the OCC has gone beyond its legal authority to determine what defines a bank.

#### Goldium FX - Toronto Currency Exchange Goldium FX

The current price for USD/CNY = . You think the price of the Yuan will rise in 6 months to (in other words, the Yuan will strengthen against the dollar) , so you sell a forward contract in USD for \$6,555,555 and buy a forward contract for 7,655,555 Yuan for the forward price of . If, in 6 months, the Yuan does rise to per dollar, then the cash-settled amount in USD would be 7,655,555 / = 6,568, USD, yielding a profit of \$68,. (The forward exchange rate was simply picked for illustration, and is not based on current interest rates.)

If the spot price for USD/EUR = , then this means that 6 USD =.7895 EUR. The interest rate in Europe is currently % , and the current interest rate in the United States is %. In 6 year, 6 dollar earning United States interest will be worth \$ and Euro earning the European interest rate of % will be worth Euro. Thus, the forward spot rate 6 year from now is equal to / , or, using the above equation (note, however, that rounding errors between the 7 different methods of calculating the forward rate results in slight differences) :