What are 'Checks And Balances'?

Checks and balances are various procedures set in place to reduce mistakes, prevent improper behavior or decrease the risk of centralization of power. Checks and balances usually ensure that no one person or department has absolute control over decisions, clearly define the assigned duties, and force cooperation in completing tasks. In the case of the United States government exercises checks and balances through its three branches: the legislative, executive and judicial branches.

BREAKING DOWN 'Checks And Balances'

Checks and balances are important in businesses and other organizations where one individual can make decisions that affect operations. However, checks and balances can cost more money and decrease efficiency. By separating the duties of various employees into clearly defined roles, businesses and organizations are better able to ensure that rogue employees or executives cannot harm a business without the intervention of other employees. The term is most commonly used in the context of government.

An Example of Checks and Balances Within the Government

The United States Constitution provides checks and balances for the U.S. government through its three branches: the legislative branch, the executive branch and the judicial branch. The Constitution gave specific abilities to each one of these three branches. The concept is to ensure that no one section of the government obtains too much power. Therefore, there is a separation of powers.

Checks and balances are practiced in the U.S. government in the following ways. First, the legislative branch is the part of the government that makes laws, but the executive branch gives veto power to the president allowing the president to keep the legislative branch in check. In addition, the judicial branch, the part of the government that enforces the laws put into effect by the legislative branch, can deem certain laws unconstitutional making them void.

Moreover, while the president has veto power, the legislative branch can overturn a president's veto with a two-thirds vote. This ensures that the president cannot use his power for personal gain. The executive branch can also declare executive orders, effectively proclaiming how certain laws should be enforced, but the judicial branch can deem these orders to be unconstitutional.

However, executive orders are often for the benefit of the country and are considered unconstitutional. For example, President Obama, on April 19, 2016, proclaimed an executive order that blocked property and suspended entry into the United States of all people who were seen to contribute to the current situation in Libya. In this scenario, the judicial branch stood firm with the president's order.

RELATED TERMS
  1. Branch Manager

    A branch manager is an executive who is in charge of the branch ...
  2. Branch Banking

    Branch banking is engaging in banking activities such as accepting ...
  3. Funds Transfer Pricing - FTP

    Funds Transfer Pricing - FTP is a method used to individually ...
  4. International Banking Act of 1978

    The International Banking Act of 1978 put all American bank branches ...
  5. Available Balance

    The available balance is the balance in checking or on-demand ...
  6. Certified Check

    A certified check is a type of check for which the issuing bank ...
Related Articles
  1. Personal Finance

    U.S. Banks Struggle To Reduce Branches (JPM)

    The efforts by U.S. banks to get lean by reduction in branch network are getting challenged by customers who won’t give up regular visits to the branch
  2. Investing

    Bank of America Tests Automated Branches

    Bank of America offers mortgage, credit card and auto loan service through virtual channels at its new smaller branches.
  3. Personal Finance

    HSBC to Shut Down Half of Retail Branches in India, Shed 300 Jobs (HSBC-PA)

    HSBC will close over half of its retail branches in India to keep pace with global businesses shifting to digital channels.
  4. Investing

    Big-Bank Branch Growth May Most Hurt Wells Fargo

    America's largest financial institutions are doubling down on new markets at the expense of Wells.
  5. Insights

    The 4 Biggest Chinese Banks

    Learn how the Chinese banking system is operated and managed, and get information about the top four largest banks in the country.
  6. Small Business

    Best Checking Accounts For Small Businesses

    What you need to know to choose the best checking account for your small business – and where to look.
  7. Managing Wealth

    Review: Discover Checking Account

    Will having a Discover checking account save you money? It will save you fees.
  8. IPF - Banking

    Which Banks Pay the Highest Interest Rates on Savings Accounts?

    Online banks offer the best savings account interest rates. Not all banks offer the same features, so it pays to read the fine print.
  9. Investing

    A Look At National Debt And Government Bonds

    Learn the functions of the U.S. Treasury, and find out how and why it issues debt.
RELATED FAQS
  1. Why do some people claim the Federal Reserve is unconstitutional?

    Learn why some people believe it was unconstitutional for the government to establish the Federal Reserve Bank and why they ... Read Answer >>
  2. Can Foreigners Open Savings Accounts in the US?

    Find out what it takes for a foreign individual to open a savings accounts in the US especially in the age of heightened ... Read Answer >>
Trading Center