1.a) With references to the entries on their balance sheets, explain the key financial services provided by commercial banks. b) What are the main risks involved in providing those services?

Table 2: Assets and Liabilities of UK Banks, March 2007 fm Sterling Assets Notes and Coin Balances at the Bank of 16,824 Time Deposits Sterling Liabilities M 8,672 Sight Deposits 990,221 1,254,524 England Market Loans 940,963 CDs and Other Paper 185,121 Advances 1,519,272 Liabilities Under Sale and 343,616 Repurchase Agreements Bills 12,300 Sterling Capital 297,530 Claims Under Sale and 328,218 Other Repurchase Agreements 47,329 200,727 Investments Other Total 96,587 3,123,563 Total 3,118,341 Source: p77, Howells, P. and Bain, K. (2008), The Economics of Money, Banking and Finance, A European Text, 4 Edition