The difference between banks and other financial intermediaries is that only banks have the legal authority to:
A) transfer funds from savers to borrowers.
B) pay interest on debt obligations.
C) manage portfolios of assets.
D) create assets that are part of the money supply.

Question

Quizplus · Accepted Answer

Only banks have the legal authority to create assets that are part of the money supply, which means they can create new money by making loans and taking deposits. Other financial intermediaries such as mutual funds or insurance companies do not have this legal authority.

The Difference Between Banks and Other Financial Intermediaries Is That