What is the fundamental characteristic of a bank?

The fundamental characteristic of a bank is that it is regulated by the national government or central bank. This regulatory framework ensures that banks operate within established guidelines to protect consumers, maintain public confidence in the financial system, and promote stability in the economy. These regulations cover a range of areas, including capital requirements, loan practices, and consumer protections, which allows banks to function effectively while minimizing risks associated with banking operations.

Other options, such as offering insurance products, focusing on investment management, or operating exclusively online, may describe certain financial institutions or services but do not encompass the essential nature of what defines a bank. While some banks may offer insurance or provide investment services, these features are not universal to all banks and do not capture the core aspect of banking, which is its regulatory oversight and role in the financial system.