Banking system activity Albanian legislation does not have a clear theoretical definition regarding the banking system, but even in the literature there is a confusion regarding the inclusion in the notion of “banking system”, which is due to the fact that there is a variety of financial intermediaries who provide few services. a lot of the same and that more and more the differences between them are fading. This phenomenon is also favored by recent legislative changes, which with the aim of favoring free activity in a free market economy, have left legal space that allows financial enterprises to develop a diverse activity. There is no precise definition of the banking system in the legislation of most contemporary countries.
Currently, the Albanian law does not say what the banking system is, but only Article 3 of the Law “On banks in the Republic of Albania” stipulates that “the banking system in Albania is organized in two levels, the first level includes the Bank of Albania and in The second level includes other banks which are called “second tier banks.” From this definition it can be implied that according to the legislator, the banking system consists only of those legal entities that are licensed as “banks”, thus excluding intermediaries. This definition makes it clear that a bank cannot be an individual or a natural person, but only a legal entity.
In a broad sense, the “Banking System” includes not only those entities that are licensed to operate as banks, but also other financial institutions, whether public or private, which operate more or less in the field of monetary circulation and perform a banking activities, but which can be natural or legal persons.
What is banking activity?
An exact definition regarding it was made too late in banking law. The treatment of banks simply as intermediaries between the depositor and the borrower, gave in general terms a definition of banking activity as an activity that takes money from someone and gives money to someone. There are many countries that do not yet have such a definition in their banking laws.
The Law “On Banks in the Republic of Albania” gives this definition:
“Banking activity is the acceptance of monetary deposits or other repayable funds by the public and their use for lending and placement in the name and on its own account, as well as the issuance of means of payment in the form of electronic money.”
So banks are not just operating entities in collecting and distributing money to their customers, but they perform a range of services on behalf of their customers, such as payment, exchange, guarantee, etc. Banking activity is the heart of the banking industry which includes the entirety of banking services and the community of banks that offer them. The banking industry fulfills three functions in itself:
- Participation and service of payments and receipts on behalf of business entities and citizens;
- Collection of public money through acceptance of deposits;
- Lending and financing for change purposes for business entities and individuals.
The bank is in itself a financial intermediary, but is essentially a business entity, which in a given market environment, sells fundraising services as well as fundraising services. The increase of funds is realized in the market of accepting deposits from those entities that at the moment have surplus money, while the product issued by the bank is the loan which finances individuals and firms that at the moment precisely have a lack of cash.
Nature of banking operations – A characteristic of banking activity is that these types of transactions are formal. This definition stems from the fact that when the client establishes a relationship with the bank, he accepts the terms of the banking business. In most cases, the client does not have the opportunity to change the terms of this business, but only to choose between the alternatives that the bank presents, even the legal documentation that is signed between them, as a party to the legal relationship, is prepared in advance by the bank.
Based on the role of the bank, banking activities can be divided into:
Active activities – in which the bank is presented as a creditor, eg a loan;
Pas passive activities – in which the bank is a debtor, eg deposits;
Neut neutral activity – where the bank presents itself to a third party as an intermediary, commission agent or representative on behalf of its client.
This classification of banking activities has more economic character, while from the legal point of view, the bank can be presented with rights and obligations at the same time in the same legal relationship between it and the client. Likewise, in “neutral activities” it can not be said that the Bank is “neutral” from a legal point of view, because first; the bank refuses to perform these intermediations or representations on behalf of the client if they do not comply with the standards and conditions of its banking business; secondly, when entering into these relations, the bank assumes obligations to customers, but at the same time has the right to be rewarded for the work it performs, but most importantly, the right to terminate the banking operation if it finds that there are elements of concealment. criminal activity; third, by performing actions on behalf of third parties, it also assumes responsibility for the quality, accuracy and timing of the action.
From a legal point of view, banking operations will be divided into banking contracts and banking services. This division is made on the basis of the legal status that the bank has in various banking activities. Thus, those types of commercial banking relations, where the bank presents itself as the main party, assumes obligations and acquires rights in its name and on its behalf, are genuine contracts, with a certain continuity, for example, the case when the bank accepts the deposit establishes a contractual relationship with the depositor. Whereas, in cases when the bank performs a simple banking transaction and when the relations of the parties end with the performance of this transaction, they have more of a service nature, for example when the bank makes foreign exchange at its counters, or money transfers.
Controversial is the case of a relationship where the bank is an intermediary party to carry out a commercial banking transaction between two clients, or, when it enters into operations (relationship), authorized and on behalf of one of its clients. In these cases, the bank is a party, regardless of whether it is an intermediary, or a party that enters into a relationship with representation, but at the same time performs service-oriented actions to its client.
