TAILIEUCHUNG - Lecture Principles of money, banking, and financial markets (12th edition): Chapter 18 - Ritter, Silber, Udell

Chapter 18 - Bank reserves and the money supply. In this chapter you will learn to understand the mechanics of check clearing and its impact on the balance sheets of commercial banks and the Federal Reserve, explain how banks create deposits by making loans, define the role of the banking system in deposit creation and destruction. | Chapter 18 Bank Reserves and the Money Supply Copyright © 2009 Pearson Addison-Wesley. All rights reserved. Learning Objectives • Understand the mechanics of check clearing and its impact on the balance sheets of commercial banks and the Federal Reserve • Explain how banks create deposits by making loans • Define the role of the banking system in deposit creation and destruction Copyright © 2009 Pearson Addison-Wesley. All rights reserved. 18-2 Introduction • Examine the relationship between bank reserves and the money supply • Money supply (M1) is composed mostly of demand deposits in commercial banks and other financial institutions • Bank reserves play a crucial role in creating demand deposits • By regulating bank reserves, Federal reserve gets leverage to control amount of demand deposits and thereby nation’s money supply Copyright © 2009 Pearson Addison-Wesley. All rights reserved. 18-3 1 Check Clearing and Collection • Focus on the relationship between reserves and demand deposits • Demand deposit is an asset for the depositor, but a liability of a bank because it is obligated to pay it on demand • Federal Reserve has little direct contact with the public, mainly deal with the government and financial institutions Copyright © 2009 Pearson Addison-Wesley. All rights reserved. 18-4 Check Clearing and Collection (Cont.) • Federal Reserve is primary collection vehicle for checks • Check clearing is accomplished by adding or subtracting reserves held on deposit by the bank at its regional Federal Reserve bank Copyright © 2009 Pearson Addison-Wesley. All rights reserved. 18-5 Check Clearing and Collection (Cont.) • Sequence of events when a check, drawn on the other bank (B), is deposited in our bank (A) – Demand deposits in Bank A increase with a corresponding increase in assets (check in process of collection) – When the check clears through the Fed check clearing system, the Fed increases Bank A’s “deposits in Fed” by the amount of the check – .

• Ngân hàng - Tín dụng
• Financial markets
• Financial institutions
• Monetary policy
• International finance
• Monetary theory
• Bank reserves
• Money supply
• Lecture Financial markets
• Thị trường tài chính
• Financial futures markets
• Valuation of financial futures
• Interest rate futures
• Lecture Financial markets and institutions
• Financial institutions markets
• Capital markets
• Money markets
• Derivative securities markets
• Futures markets
• Option markets
• Swap markets
• Foreign exchange derivative markets
• Bank management
• Types of Financial Markets
• Securities traded
• Valuation of securities
• Money market yields
• Bond markets
• Municipal bonds
• Mortgage markets
• Primary mortgage market
• Stock markets
• Common stock
• Foreign exchange markets
• Foreign exchange
• Commercial banks
• Financial statements
• Risks at financial institutions
• Market risk
• Exchange rates
• Economics 252
• Efficient markets
• Excess volatility
• Efficient Markets Hypothesis
• Interest rate derivative markets
• Interest rate swaps
• Mortgage backed securities
• Globalization of mortgage markets
• Financial markets and institutions
• The financial system
• Interest rates change
• Financial markets efficient
• Term structure affect interest rates
• The stock market
• The mortgage markets
• The international financial system
• Financial regulation
• Interest rate fundamentals
• Interest rates
• Security valuation