第二十九章货币制度解说.ppt

* The definition of currency in the textbook does not include “(non-bank)”. I added it to avoid confusion later, when students are asked to think about what happens to the money supply when a consumer decides to deposit a $50 bill into his or her checking account. * Source: Federal Reserve, Board of Governors, Statistical Release H.6. The latest H.6 release can be found at: /releases/h6/Current/ * In subsequent chapters (including the chapter immediately following this one), students will learn that the Federal Reserve’s monetary policy can have huge effects on many macroeconomic variables, like inflation, interest rates, unemployment, and even stock price indexes and exchange rates. As chair of the FOMC, Ben Bernanke is in the news quite frequently. * Deposits are liabilities to the bank because they represent the depositors’ claims on the bank. Loans are an asset for the bank because they represent the banks’ claims on its borrowers. Reserves are an asset because they are funds available to the bank. * The notion that banks create money by making loans is a new and perhaps awkward idea for students. The following slide may help. * Students more easily accept the idea that banks create money when they see that banks do not create wealth. * Reserve requirements were introduced defined on the slide titled “Bank Reserves,” immediately following “The Structure of the Fed.” Reserve requirements are not a good tool for monetary policy: To make the money supply grow over time, the Fed would have to continually reduce reserve requirements. This is neither possible – they cannot be reduced below 0 – nor desirable – if reserves are too low, then banks will have liquidity problems, and bank runs (discussed later in the chapter) might become fashionable again. To reduce the money supply using reserve requirements, banks wouldn’t be able to make as many loans, which would make the banking industry less profitable and could cause it to contract.