Đang tải... (xem toàn văn)
After reading this chapter, you should be able to: Explain the basics of a bank''s balance sheet and discuss why the U.S. banking system is called a fractional reserve system; explain the distinction between a bank''s actual reserves and its required reserves; describe how a bank can create money; describe the multiple expansion of loans and money by the entire banking system; define the money multiplier, explain how to calculate it, and demonstrate its relevance.
32 MoneyCreation McGrawưHill/Irwin Copyrightâ2012byTheMcGrawưHillCompanies,Inc.Allrightsreserved FractionalReserveSystem The Goldsmiths Stored gold and gave a receipt • Receipts used as money by public • Made loans by issuing receipts • Characteristics: • Banks create money through lending • Banks are subject to “panics” LO1 32-2 Fractional Reserve System • Balance sheet • Assets = Liabilities + Net Worth • Both sides balance • Necessary transactions • Create a bank • Accept deposits • Lend excess reserves LO1 32-3 A Single Commercial Bank Transaction #1 Vault cash: cash held by the bank Creating a Bank Balance Sheet 1: Wahoo Bank Assets Cash LO1 Liabilities and Net Worth $250,000 Stock Shares $250,000 32-4 A Single Commercial Bank Transaction #2 Acquiring property and equipment Acquiring Property and Equipment Balance Sheet 2: Wahoo Bank Assets Cash Property LO1 Liabilities and Net Worth $10,000 Stock Shares 240,000 $250,000 32-5 A Single Commercial Bank Transaction #3 Commercial bank functions • Accepting deposits • Making loans Accepting Deposits Balance Sheet 3: Wahoo Bank Assets Cash Property LO1 Liabilities and Net Worth $110,000 240,000 Checkable Deposits Stock Shares $100,000 250,000 32-6 A Single Commercial Bank Transaction #4 Depositing reserves in a Federal Reserve bank • Required reserves • Reserve ratio Reserve ratio LO2 = Commercial bank’s Required reserves Commercial bank’s Checkable-deposit liabilities 32-7 A Single Commercial Bank Type of Deposit Current Requirement Statutory Limits Checkable deposits: $0-$10.7 Million $10.7-$55.2 Million Over $55.2 Million Noncheckable nonpersonal savings and time deposits • • LO2 0% 10 3% 8-14 0-9 The Fed can establish and vary the reserve ratio within limits set by Congress Required reserves help the Fed control lending abilities of commercial banks 32-8 A Single Commercial Bank Transaction #4 Assume the bank deposits all cash on reserve at the Fed Depositing Reserves at the Fed Balance Sheet 4: Wahoo Bank Assets LO2 Liabilities and Net Worth Cash Reserves $0 Checkable 110,000 Deposits Property 240,000 Stock Shares $100,000 250,000 32-9 A Single Commercial Bank • Excess reserves • Actual reserves - required reserves • Required reserves • Checkable deposits x reserve ratio • Example: • Checkable deposits $100,000 • Reserve ratio 20% LO2 32-10 A Single Commercial Bank • Transaction #5 Clearing a check $50,000 check reduces reserves and checkable deposits Clearing a Check Balance Sheet 5: Wahoo Bank Assets Reserves Property LO2 Liabilities and Net Worth Checkable $60,000 Deposits 240,000 Stock Shares $50,000 250,000 32-11 Money Creating Transactions Transaction #6a Granting a loan • $50,000 loan deposited to checking When a Loan is Negotiated Balance Sheet 6a: Wahoo Bank Assets Reserves Loans Property LO3 Liabilities and Net Worth $60,000 Checkable Deposits 50,000 240,000 Stock Shares $100,000 250,000 32-12 Money Creating Transactions • Transaction #6b Using the loan $50,000 loan cashed After a Check is Drawn on the Loan Balance Sheet 6b: Wahoo Bank Assets Reserves Loans Property Liabilities and Net Worth $10,000 Checkable Deposits 50,000 $50,000 240,000 Stock Shares 250,000 A single bank can only lend an amount equal to its preloan excess reserves LO3 32-13 Money Creating Transactions • Transaction #7 Bank buys government securities from a dealer Deposits payment into checking Buying Government Securities Balance Sheet 7: Wahoo Bank Assets Reserves Securities Property Liabilities and Net Worth $60,000 Checkable Deposits 50,000 240,000 Stock Shares $100,000 250,000 • New money is created LO3 32-14 Profits, Liquidity, and the Fed Funds Market • Conflicting goals • Earn profit • Make loans to earn interest • Buy securities to earn interest • Maintain liquidity • Alternative? • Overnight bank loans • Federal funds rate LO3 32-15 The Monetary Multiplier Monetary multiplier LO5 = required reserve ratio = R 32-16 ... Commercial bank’s Checkable-deposit liabilities 3 2-7 A Single Commercial Bank Type of Deposit Current Requirement Statutory Limits Checkable deposits: $ 0-$ 10.7 Million $10. 7-$ 55.2 Million Over $55.2... receipt • Receipts used as money by public • Made loans by issuing receipts • Characteristics: • Banks create money through lending • Banks are subject to “panics” LO1 3 2-2 Fractional Reserve System... LO2 0% 10 3% 8-1 4 0-9 The Fed can establish and vary the reserve ratio within limits set by Congress Required reserves help the Fed control lending abilities of commercial banks 3 2-8 A Single Commercial Bank