A bank is an institution that acts as an intermediary, matching people with savings to those who need to borrow

What do you think of when you hear the word “bank”? A basketball bank shot? The Bank station on the London Underground, where the announcer calls out “Mind the Gap”? Or a game of Monopoly? Maybe it’s just the place where you keep your money. If you have any.

Banks are central to the economy and to politics. You won’t be able to understand important political debates unless you know what banks do and how they fit into the overall economy. On this episode of A Dictionary of Finance Allar and Matt talk to experts about what banks are and what they do—in a simple way that’s easy to understand.

The guests on this week’s podcast are Natacha Valla and Markus Berndt. Markus is responsible for developing new areas of engagement at the European Investment Bank. We learn from his experience at the Bank, as well as from his PhD studies in economics at the Max-Planck Institute and the University of Hamburg. The Red Hot Chili Peppers also come up…

Natacha Valla is the head of the Policy and Strategy Division in the Economics Department at the EIB. She studies investment dynamics and international capital flows. She worked at the European Central Bank and with the French Prime Minister, and is the author of a textbook on Financial Macroeconomics.

With Natacha and Markus, we discuss the power of banks, tracing their history from the Italian banks of the fourteenth century and musing about where the industry will go in the future. Natacha and Markus talk about different kinds of banks, from retail or consumer banks, through wholesale banks which lend to other banks, and investment banks, which are active in market trading and funding corporations. We also talk about multilateral development banks, like the European Investment Bank. They tell us how this works, and why it’s so important to the economy.

Subscribe to A Dictionary of Finance podcast in the iTunes podcast app or on other podcast platforms. You can suggest topics for future podcasts by tweeting Matt or Allar. We’re @EIBMatt and @AllarTankler.