What is the role of a secondary bank?

A secondary bank primarily functions in capital markets, focusing on arranging new securities—a key aspect of investment banking. This involves underwriting or facilitating the issuance of stocks and bonds, which helps companies raise capital for growth and expansion. By dealing in capital markets, secondary banks play a vital role in enhancing liquidity and providing investment opportunities for institutional and retail investors alike.

While the other options present various banking functions, they do not encapsulate the primary role of a secondary bank. Providing day-to-day banking services, such as those typically handled by commercial banks, does not align with the specialized focus of secondary banks on investment and capital market activities. Similarly, while clearing systems are indeed vital for the banking infrastructure, this role aligns more with central or clearing banks than with secondary banks. Lastly, offering savings accounts is characteristic of retail banks and does not represent the primary mission of secondary banks, which is centered around investment and capital financing rather than traditional savings and transaction services.