Home   |  Issues  |  The Daily Star Home | Volume 3, Issue 42, Tuesday June 6, 2006



Banking Tips

Nasreen Sattar Head of International Sales, Standard Chartered Bank

Question: What is the difference between Fixed and Floating Exchange Rate system?

There are two ways the price of one currency can be determined against another. A fixed, or pegged, rate is a rate the government (central bank) sets and maintains as the official exchange rate. A set price will be determined against a major world currency (usually the U.S. dollar, but also other major currencies such as the euro, the yen, or a basket of currencies).

Unlike the fixed rate, a floating exchange rate is determined by the private market through supply and demand. A floating rate is often termed "self-correcting", as any differences in supply and demand will automatically be corrected in the market. A floating exchange rate is constantly changing.

In reality, no currency is wholly fixed or floating. In a fixed regime, market pressures can also influence changes in the exchange rate. In a floating regime, the central bank may intervene when it is necessary to ensure stability and to avoid inflation.

Q. Mr. X has an overdraft limit of BDT 40,000/ with a bank. On a particular day when the debit balance in the account is BDT 38,200, a cheque of BDT 5,800 drawn on the account is presented for cash payment by a third party. Will the bank pay this cheque and why? If not, what would you call it if the unpaid cheque is returned?

If the cheque in question is paid by the banker, the debit balance in the account of Mr. X will go up to BDT 44,000 (i.e. BDT 38,200+BDT 5,800) and will exceed the overdraft limit of BDT 40,000 by BDT 4,000. The banker should, therefore not make payment of the cheque. While returning this unpaid cheque the correct remark should be 'exceeds arrangement' as the overdraft arrangement does not permit the payment of the cheque.

Q. A firm having A, B and C as partners enjoys an overdraft limit of BDT 1 Lac with the bank. A communication is received by the bank that A died on 10th April, 2006. On 11th April, 2006 two cheques signed by the deceased partner on 8th April, 2006 are presented for action. Please explain how a bank deals with this.

On the death of a partner, the bank must stop payment from the partnership account specially to determine the liability of the deceased partner. The bank should not make payment of the two cheques presented after the receipt of the communication reporting the death of the partner.

Interpreter of maladies

Dear Dr,
I have a serious problem remembering things. I leave my watch somewhere and can't find it five minutes later. I leave the water tap open. I forget to give phone messages to other people. I forget people's names just the day after I had an hour-long chat with them. I forget to do things that are important. To remember things I send e-mails to myself or write notes, use the reminder option in my cell phone very often. My wall has post-its all over it. Sometimes I just forget to read the notes that I had written to myself and get into more trouble. However, in my office I have developed a rhythm, which is helping me but at other times, I forget things all the time. I would like to know if this is called short-term memory loss. I really need help.

Ans: Memory is mainly of three types- sensory memory (holds information coming in through senses for the fraction of a second to several seconds), short term memory (holds around seven items at a time for less than 30 seconds) and long term memory (vast storehouse of relatively permanent memories). The short term memory is also referred to as “working memory” as it is the mental workplace we use to keep all the information required to complete a task in hand at any given point in time (e.g. remembering the direction someone just gave you to reach a place while driving). It is also claimed by researchers that short term memory is not one but a complex set of interacting subsystems that are together referred to as “working memory”. This memory works as a transit station for both incoming and outgoing impulses to/from permanent memory.

However, for the purpose of clinical assessment, memory is divided into another three types. These are immediate memory (functions over a period of seconds), recent memory (applies on the scale of minutes to days) and remote memory (encompasses months to years).The theoretical concept of working memory incorporates both immediate and recent memory.

Memory formation takes place in a few successive steps:
First, encoding (transforming information into a form that can be stored in short term or long term memory, e.g. if someone says her name is “Joba”, we may encode or associate it with a flower), second, storage (the act of maintaining information in memory) and third, consolidation (normally an automatic process involving certain areas of the brain). Retrieval is the process of bringing back to mind the material that has been stored in memory.

How old are you? I'm assuming you are an otherwise healthy, young, working person. The examples you have given leaves room to doubt whether there had been any short term memory formation at all. Attention, focus and rehearsal are very important steps in the encoding stage of memory formation. The examples you have given, more accurately represents “encoding failure” rather than short term memory failure. Too much stress, anxiety, depression, substance use (alcohol or drug) etc. can lead to forgetfulness by causing a functional damage (altering neurotransmitter level) to brain rather than causing organic or structural damage. Inability to focus and lack of attention (thereby interfering with encoding process) are the main causes of forgetfulness in Psychological Disorders. Side effects of certain medications are also sometimes responsible for memory failure.

Successful treatment of these conditions leads to remarkable improvement of memory problems. If you are trying to do too much work, you might start feeling overwhelmed, forgetful and more prone to making mistakes. This is how our brain gives us signal to “slow down” or “take it easy”. Our brain has limited capacity (that's why it is very selective in making memories) and if it gets bombarded with too much information (from internal or external sources), it will defend itself by forgetting!

Some degree of memory problem is a common phenomenon of normal aging process. It usually progresses slowly and doesn't interfere extensively with daily functioning. However, under certain medical conditions, memory problems get serious enough and medical help is required to restore regular activity. A memory problem is serious if it affects daily life, and when people cannot remember how to do things that they have done many times before (e.g., cooking a certain dish, driving to the workplace, shopping, taking bath etc.). They find it hard to even have a conversation or to learn anything new.

Alzheimer's disease (nerve cells die too fast) is the most common medical cause of memory problems and initially causes typical short term memory failure. Stroke, dehydration, poor nutrition (vitamin deficiency), brain injury etc. can also result in serious memory problems. Investigations like CT scan, MRI etc. can be helpful to rule out organic cause of memory loss.

Organizing memory by specific methods (e.g. keeping lists, following a routine, making associations to help encoding process, maintaining a detail calendar, putting important items in the same place every time, repeating names when meeting people for the first time etc.) are helpful tools in this era of multi tasking. Having a secretary at work and a partner at home can help to decrease the workload. So cheer up, talk to a physician, review all the possibilities and take action accordingly.

By the way

To remove the odour of garlic or fish from your hands, wash them with lime juice or salted water before applying soap.


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