Banking

These banks, which are dominated by the ‘Big Four’ (Lloyds, Barclays, the National Westminster and the Midland) operate through a network of branches throughout the country. Their importance in the financial system stems from the fact that most of their business is conducted by way of cheques which are cleared at the London Clearing House. Indeed, the six member banks of the London Clearing House are often referred to as ‘clearing banks’, and other banks have to do their clearing through one of these. As we shall see, this system of clearing allows them to economise in the use of cash, so allowing them to ‘create’ credit which serves as money.