topic_3-1......ppt
- Количество слайдов: 31
Functions of Money What Backs the Money Supply Demand for Money The Money Market 13 CHAPTER The Federal Reserve & the Banking System FED Functions & the Money Supply Money and Banking Key Terms Previous Slide End Show 13 - 1 Next Slide Vendik Anna, ET&B 12. 02. 2018
FUNCTIONS OF MONEY Functions of Money What Backs the Money Supply • Medium of Exchange Demand for Money The Money Market The Federal Reserve & the Banking System FED Functions & the Money Supply Key Terms Previous Slide End Show 13 - 2 • Unit of Account • Store of Value Next Slide Vendik Anna, ET&B 12. 02. 2018
MONEY SUPPLY Functions of Money What Backs the Money Supply Demand for Money The Money Market The Federal Reserve & the Banking System FED Functions & the Money Supply Key Terms Previous Slide End Show 13 - 3 Definition… Currency • Token Money • Federal Reserve Notes • Little Intrinsic Value Checkable Deposits Next Slide • Commercial Banks • Thrift Institutions Vendik Anna, ET&B 12. 02. 2018
MONEY SUPPLY Functions of Money What Backs the Money Supply Demand for Money The Money Market The Federal Reserve & the Banking System FED Functions & the Money Supply Key Terms Previous Slide End Show 13 - 4 Next Slide = Plus. . . Near-monies Savings Deposits • Money Market Deposit Accounts (MMDAs) Smaller Time Deposits Money Market Mutual Funds (MMMFs) Vendik Anna, ET&B 12. 02. 2018
MONEY SUPPLY Functions of Money What Backs the Money Supply = Plus. . . Demand for Money The Money Market The Federal Reserve & the Banking System Large Time Deposits FED Functions & the Money Supply Key Terms Previous Slide End Show 13 - 5 Illustrated… Next Slide Vendik Anna, ET&B 12. 02. 2018
MONEY SUPPLY Functions of Money What Backs the Money Supply Demand for Money Currency (coins & paper money) plus Checkable deposits M 1 M 2 M 3 equals M 1 The Money Market $1236 The Federal Reserve & the Banking System FED Functions & the Money Supply Key Terms Previous Slide End Show 13 - 6 Next Slide 2003 Data (billions of dollars) Vendik Anna, ET&B 12. 02. 2018
MONEY SUPPLY Functions of Money What Backs the Money Supply Demand for Money The Money Market The Federal Reserve & the Banking System FED Functions & the Money Supply Key Terms M 1 M 2 M 3 Currency (coins & paper money) plus Checkable deposits equals M 1 plus Savings deposits, $1236 including MMDA’s plus Small time deposits plus Money market mutual fund (MMMF) balances equals M 2 Previous Slide End Show 13 - 7 $5899 Next Slide 2003 Data (billions of dollars) Vendik Anna, ET&B 12. 02. 2018
MONEY SUPPLY Functions of Money What Backs the Money Supply Demand for Money The Money Market The Federal Reserve & the Banking System FED Functions & the Money Supply Key Terms M 1 M 2 M 3 Currency (coins & paper money) plus Checkable deposits equals M 1 plus Savings deposits, $1236 including MMDA’s plus Small time deposits plus Money market mutual fund (MMMF) balances equals M 2 Previous Slide End Show 13 - 8 Next Slide $5899 plus Large time deposits equals M 3 Vendik Anna, ET&B 2003 Data (billions of dollars) 12. 02. 2018 $8595
MONEY SUPPLY in RF Functions of Money What Backs the Money Supply Demand for Money • The Central bank calculate only M 0 and M 2. The Money Market The Federal Reserve & the Banking System FED Functions & the Money Supply Key Terms Previous Slide End Show 13 - 9 Next Slide Vendik Anna, ET&B 12. 02. 2018
WHAT ABOUT CREDIT CARDS? Functions of Money What Backs the Money Supply Demand for Money The Money Market The Federal Reserve & the Banking System FED Functions & the Money Supply Key Terms Previous Slide End Show 13 - 10 Next Slide Vendik Anna, ET&B 12. 02. 2018
WHAT BACKS THE MONEY SUPPLY? Functions of Money What Backs the Money Supply Demand for Money The Money Market The Federal Reserve & the Banking System FED Functions & the Money Supply Key Terms Previous Slide End Show 13 - 11 Next Slide Money as Debt Value of Money • Acceptability • Legal Tender • Relative Scarcity Money and Prices • Purchasing Power of Money • D = 1/Price Level Inflation and Acceptability Vendik Anna, ET&B 12. 02. 2018
WHAT BACKS THE MONEY SUPPLY? Functions of Money What Backs the Money Supply Demand for Money The Money Market The Federal Reserve & the Banking System FED Functions & the Money Supply Key Terms Previous Slide End Show 13 - 12 Next Slide So, What Backs the Money Supply? Stable Value! through. . . • Appropriate Fiscal Policy • Intelligent Management of the Money Supply – Monetary Policy Vendik Anna, ET&B 12. 02. 2018
THE DEMAND FOR MONEY Functions of Money What Backs the Money Supply Demand for Money The Money Market The Federal Reserve & the Banking System FED Functions & the Money Supply Key Terms Previous Slide End Show 13 - 13 Next Slide Transactions Demand, Dt varies directly with nominal GDP Asset Demand, Da varies inversely with the interest rate Liquidity Preference illustrated. . . Vendik Anna, ET&B 12. 02. 2018
THE DEMAND FOR MONEY Transactions Demand, Dt Functions of Money Demand for Money The Money Market The Federal Reserve & the Banking System FED Functions & the Money Supply Rate of interest, i (percent) What Backs the Money Supply + 10 7. 5 5 2. 5 Dt 0 0 50 100 150 200 250 300 Key Terms Amount of money demanded (billions of dollars) Previous Slide End Show 13 - 14 Next Slide Vendik Anna, ET&B 12. 02. 2018
THE DEMAND FOR MONEY Demand for Money The Money Market The Federal Reserve & the Banking System FED Functions & the Money Supply Rate of interest, i (percent) What Backs the Money Supply + 10 7. 5 5 2. 5 Dt Rate of interest, i (percent) Transactions Demand, Dt Functions of Money Asset Demand, Da = 10 7. 5 5 2. 5 Da 0 0 50 100 150 200 250 300 Previous Slide End Show 13 - 15 0 0 50 100 150 200 250 300 Amount of money demanded (billions of dollars) Key Terms Amount of money demanded (billions of dollars) Next Slide Vendik Anna, ET&B 12. 02. 2018
THE DEMAND FOR MONEY The Money Market The Federal Reserve & the Banking System FED Functions & the Money Supply + 10 7. 5 5 2. 5 Dt Asset Demand, Da = Total demand for money, Dm Rate of interest, i (percent) Demand for Money Rate of interest, i (percent) What Backs the Money Supply Rate of interest, i (percent) Transactions Demand, Dt Functions of Money 10 7. 5 5 2. 5 Da 10 7. 5 5 2. 5 Dm 0 0 50 100 150 200 250 300 Previous Slide End Show 13 - 16 0 0 50 100 150 200 250 300 Amount of money demanded (billions of dollars) Key Terms Amount of money demanded (billions of dollars) Next Slide Vendik Anna, ET&B 12. 02. 2018
THE DEMAND FOR MONEY Transactions Demand, Dt The Money Market The Federal Reserve & the Banking System FED Functions & the Money Supply 10 7. 5 5 2. 5 + Asset Demand, Da = Total demand for money, Dm ADD THE MONEY SUPPLY TO FIND THE EQUILIBRIUM RATE OF INTEREST D D t 0 Rate of interest, i (percent) Demand for Money Rate of interest, i (percent) What Backs the Money Supply Rate of interest, i (percent) Functions of Money 10 7. 5 5 2. 5 a Sm 10 7. 5 ie 5 2. 5 Dm 0 50 100 150 200 250 300 Previous Slide End Show 13 - 17 0 0 50 100 150 200 250 300 Amount of money demanded (billions of dollars) Key Terms 0 0 50 100 150 200 250 300 Amount of money demanded (billions of dollars) Next Slide Equilibrium Interest Rate Vendik Anna, ET&B 12. 02. 2018
THE MONEY MARKET What Backs the Money Supply Demand for Money The Money Market The Federal Reserve & the Banking System FED Functions & the Money Supply Key Terms Previous Slide End Show 13 - 18 Next Slide Rate of interest, i (percent) Functions of Money Sm 10 7. 5 ie 5 Dm 2. 5 0 Suppose the money supply is decreased from $200 billion, Sm, to $150 billion Sm 1. 0 50 100 150 200 250 300 Amount of money demanded (billions of dollars) Vendik Anna, ET&B 12. 02. 2018
THE MONEY MARKET What Backs the Money Supply Demand for Money The Money Market The Federal Reserve & the Banking System FED Functions & the Money Supply Key Terms Previous Slide End Show 13 - 19 Next Slide Rate of interest, i (percent) Functions of Money Sm 10 7. 5 ie 5 Dm 2. 5 0 A temporary shortage of money will require the sale of some assets to meet the need. 0 50 100 150 200 250 300 Amount of money demanded (billions of dollars) Vendik Anna, ET&B 12. 02. 2018
THE MONEY MARKET What Backs the Money Supply Demand for Money The Money Market The Federal Reserve & the Banking System FED Functions & the Money Supply Key Terms Previous Slide End Show 13 - 20 Next Slide Rate of interest, i (percent) Functions of Money Sm 10 7. 5 ie 5 Dm 2. 5 0 Suppose the money supply is increased from $200 billion, Sm, to $250 billion Sm 2. 0 50 100 150 200 250 300 Amount of money demanded (billions of dollars) Vendik Anna, ET&B 12. 02. 2018
THE MONEY MARKET What Backs the Money Supply Demand for Money The Money Market The Federal Reserve & the Banking System FED Functions & the Money Supply Key Terms Previous Slide End Show 13 - 21 Next Slide Rate of interest, i (percent) Functions of Money Sm Sm 2 10 7. 5 ie 5 Dm 2. 5 0 A temporary surplus of money will require the purchase of some assets to meet the desired level of liquidity. 0 50 100 150 200 250 300 Amount of money demanded (billions of dollars) Vendik Anna, ET&B 12. 02. 2018
THE MONEY MARKET What Backs the Money Supply Demand for Money The Money Market The Federal Reserve & the Banking System FED Functions & the Money Supply Key Terms Previous Slide End Show 13 - 22 Next Slide Rate of interest, i (percent) Functions of Money Sm Sm 2 10 A temporary surplus of money will require Bonds are assumed the purchase of some 7. 5 as a typical assets to meet the dewith ie sired level of liquidity. 5 lower prices associated with higher interest rates Dm 2. 5 0 0 50 100 150 200 250 300 Amount of money demanded (billions of dollars) Vendik Anna, ET&B 12. 02. 2018
THE FEDERAL RESERVE AND THE BANKING SYSTEM OF USA Functions of Money What Backs the Money Supply Demand for Money The Money Market The Federal Reserve & the Banking System FED Functions & the Money Supply Key Terms Previous Slide End Show 13 - 23 Next Slide Centralization and Public Control • Board of Governors • Assistance & Advice • Federal Open Market Committee (FOMC) • The 12 Federal Reserve Banks • Central Bank Role • Quasi-Public Banks • Banker’s Banks • Commercial Banks & Thrifts Vendik Anna, ET&B 12. 02. 2018
THE FEDERAL RESERVE AND THE BANKING SYSTEM OF USA Functions of Money What Backs the Money Supply Demand for Money The Money Market The Federal Reserve & the Banking System FED Functions & the Money Supply Key Terms Previous Slide End Show 13 - 24 Federal Open Market Committee Board of Governors 12 Federal Reserve Banks Commercial Banks Thrift Institutions (Savings & loan associations, mutual savings banks, credit unions) The Public Next Slide (Households and businesses) Vendik Anna, ET&B 12. 02. 2018
FED Functions & the Money Supply Functions of Money What Backs the Money Supply Demand for Money The Money Market The Federal Reserve & the Banking System FED Functions & the Money Supply Key Terms Previous Slide End Show 13 - 25 Next Slide • Issuing Currency • Setting Reserve Requirements & Holding Reserves • Lending Money to Banks & Thrifts • Discount Rate • Providing for Check Collection • Acting as Fiscal Agent • Supervising Banks • Controlling the Money Supply Vendik Anna, ET&B 12. 02. 2018
FED Functions & the Money Supply Functions of Money What Backs the Money Supply Demand for Money The Money Market The Federal Reserve & the Banking System FED Functions & the Money Supply Key Terms Previous Slide End Show 13 - 26 Next Slide Federal Reserve Independence Recent Developments • Relative Decline of Banks and Thrifts • Financial Services Industry • Consolidation Among Banks and Thrifts • Convergence of Services Provided by Financial Institutions • Globalization of Financial Markets • Electronic Transactions Vendik Anna, ET&B 12. 02. 2018
Functions of Money What Backs the Money Supply Demand for Money The Money Market The Federal Reserve & the Banking System FED Functions & the Money Supply End Show 13 - 27 • The Central Bank of Russia • Banking sector: – Commercial banks; – Savings banks; – Real estate bank. • Insurance sector: Key Terms Previous Slide THE CENTRAL BANK AND THE BANKING SYSTEM OF RF Next Slide – Insurance companies; – retirement pension assets. . Vendik Anna, ET&B 12. 02. 2018
Functions of Money What Backs the Money Supply Demand for Money The Money Market The Federal Reserve & the Banking System FED Functions & the Money Supply Key Terms Previous Slide End Show 13 - 28 Next Slide THE CENTRAL BANK AND THE BANKING SYSTEM OF RF • The Central Bank of Russia – Issue currency, protect the ruble and ensure its stability – Constitution and federal law – Independence – Accountable to the State Duma – National banking board (12 persons) – Owns 57, 6% stake in Sberbank Vendik Anna, ET&B 12. 02. 2018
Functions of Money What Backs the Money Supply Demand for Money The Money Market The Federal Reserve & the Banking System FED Functions & the Money Supply Key Terms Previous Slide End Show 13 - 29 Next Slide THE CENTRAL BANK AND THE BANKING SYSTEM OF RF • Functions: – elaborates and implements a single state monetary policy; – issuer of cash and organizer of cash circulation; – the creditor of last resort for credit institutions and it organizes the credit institution refinance system; – it sets the settlement rules; – it sets the rules for conducting banking operations. – it services budget accounts on all levels • http: //www. cbr. ru/eng/today/Default. aspx? Prtid=bankstatus Vendik Anna, ET&B 12. 02. 2018
Functions of Money What Backs the Money Supply Demand for Money The Money Market The Federal Reserve & the Banking System FED Functions & the Money Supply Key Terms Russian banking sector • 1 007 banks. • The largest 20 banks control approx. 70% of total bank assets. • 6 government-controlled banks – 52% of total bank assets; – 60% of deposits. • Sberbank Previous Slide End Show 13 - 30 Next Slide – Largest credit institution; – Accounts for 25% of total bank assets. Vendik Anna, ET&B 12. 02. 2018
medium of exchange unit of account store of value M 1, M 2, M 3 token money Federal Reserve Notes checkable deposits commercial banks thrift institutions near-monies savings account money market deposit account (MMDA) time deposits Copyright Mc. Graw-Hill/Irwin, Inc. 2005 money market mutual fund (MMMF) legal tender transactions demand asset demand total demand for money market Federal Reserve System Board of Governors Federal Open Market Committee (FOMC) Federal Reserve Banks financial services industry electronic transactions BACK END
topic_3-1......ppt