ECON7003 Money and Banking. Hugh Goodacre Topic 5. BANKING RISK AND BANK REGULATION

Nov 26, 2012

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Measures to prevent bank runs review. Action by banks themselves:(1) Suspend convertibilityGovernment actions:(2) Government-backed deposit insuranceAdvantage of government over bank in arranging deposit insurance:Can use tax system to claw back funds from depositors after withdrawal of

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ECON7003 Money and Banking. Hugh Goodacre Topic 5. BANKING RISK AND BANK REGULATION

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Money and Banking

Money and Banking. Chapter 13. Chapter 13 Table 13.1. Monetary Aggregates: M1, M2, & M3. Demand for Money. Transactions Demand Depends on Income (Y) Asset Demand Depends (Inversely) on Interest Rates (r) r is the opportunity cost of holding currency or a checking account balance

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ECON7003 Money and Banking. Hugh Goodacre. Lectures 1-2. BANK RUNS

Withdrawal of deposits on demand normally no problem, despite:low deposit : asset ratiohigh gearing in bank sector(a) Scale economies:? withdrawal demands unlikely to be correlated.For banking system as a whole, likely to be inversely correlated:Debits-credits net out!(b) Tradable money mar

468 views • 28 slides

Money and Banking

Money and Banking. Chapter 10. The Three Uses of Money. _________ – anything that serves as a medium of exchange, a unit of account, and a store of value Money as a Medium of _______________ Barter if we didn’t have money Money as a Unit of _______________

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Money and Banking

Money and Banking. What is Money?. Anything which is accepted in exchange for goods & services. Barter. Exchange of goods and services for other goods and services. Eg . Bread for a haircut. Qualities of Money. A means of exchange – be in short supply A measure of value.

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MONEY and banking

MONEY and banking. What is Money?. Medium of Exchange Used to determine value during the exchange Unit of Account Ability to compare value of g/s Store of Value Holds value if saved and not spent. What Makes Good Currency?. Durability Portability Divisibility Uniformity Limited Supply

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Money and Banking

Money and Banking. 1. Forms of money. Before money was introduced, people had a system of barter or exchanging one product for another. The problems with barter led to the introduction of money, which had a standard value. Gold and silver were chosen and minted into coins.

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MONEY AND BANKING

MONEY AND BANKING. WHAT IS IT?. Forms it takes: money in the U. S. Basic definition: that which is generally acceptable in exchange for goods and services. Functions Means of exchange Store of value Standard of value Why have money at all? Barter, and the transactions cost problem

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Money and Banking

Money and Banking. 5 Points. Authority to appoint the Federal reserve Chair?. That’s right!. Who is the President?. 5 Points. The type of demand needed to purchase goods and services in the economy. That’s right!. What is transactional demand?. 5 Points.

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Money and Banking

12. “If you think nobody cares if you’re alive, try missing a couple of car payments.” Earl Wilson US Representative. Money and Banking. Chapter Objectives. The Functions of Money and the Components of the U.S. Money Supply What “Backs” the Money Supply, Making Us Willing to Accept It?

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Money and Banking

Money and Banking. Before the Civil War. What is Money. 3 functions Unit of Account A way to communicate prices Dollar was a nickname for a peso Used in international trade so became a unit of account Even though pounds, shillings and pence were common currency. Medium of exchange

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Money and Banking

Money and Banking. Barter. Exchange of goods and services for other goods and services. Eg. Bread for a haircut. What is Money?. Anything which is accepted in exchange for goods & services. Qualities of Money. Scarce in supply – be in short supply

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Money and Banking

Modigliani-Miller and Financial Structure. Money and Banking. Mr. Vaughan. Financial-Structure Puzzles. Eight, interrelated puzzles, about financial structure: Financial system boasts a broad array of marketable securities and financial intermediaries—and heterogeneity is increasing. *

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Money and Banking

Time Value of Money (Understanding Interest Rates). Money and Banking. Mr. Vaughan. Updated: 2/16/09. Learning Objectives Time Value of Money (TVM). After this lecture, you will understand: How to put cash flows received/paid out at different times in common time denominator.

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BANKING AND BANK REGULATION

BANKING AND BANK REGULATION. Why do banks exist?. To intermediate Between lenders and borrowers Pooling resources for large-scale projects Between maturities (long vs short) Borrow short-term, lend long-term Between risk-takers and the risk-averse Pooling allows diversification

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Money and Banking

Money and Banking. It’s finally March Money Month!. Functions of Money. 1. Medium of Exchange 2. Store of Value 3. Unit of Account/Standard of Value Cuts down on “transaction costs” that result from bartering (i.e., overcomes the challenge of “double coincidence of wants”).

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Money and Banking

Money and Banking. Econ 310-004 Tuesdays & Thursdays 12:00-1:15 pm Krug Hall, Room 19. Professor Chuck Moulton. Contact Info chuck@moulton.org 877-MOULTON. Office Hours Tue. & Thu., 10-11 am Ent. Hall, Work. 342. http://www.chuckmoulton.org/gmu/econ310/. Textbooks. The Economics of

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Money and Banking

Money and Banking. “Money is whatever is generally accepted in exchange for goods and services — accepted not as an object to be consumed but as an object that represents a temporary abode of purchasing power to be used for buying still other goods and services.” -- Milton Friedman.

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Money and Banking

Money and Banking. Lecture 6. Review of the Previous Lecture. Financial Intermediaries Financial Instruments Uses Characteristics Value. Topics under Discussion. Financial Instruments Examples Financial Markets Roles Structure Financial Institutions.

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