---
# System prepended metadata

title: 貨幣銀行學 chapter 15
tags: [貨幣銀行學]

---

# 貨幣銀行學 chapter 15
###### tags: `貨幣銀行學`
## going to learn
* deposit creation & money supply
* three players:
     - central bank
      - banks
      - depositors
* Federal reverse's asset & liability
* balance sheet(資產負債表) & money base & T count 
* operation of the Fed and its monetary policy involves actions that affect it balance sheet
## the Fed's balance sheet
### Asset:
- Securities (有價債卷)
- loans to financial instructions(對金融機構放款)
:::success
1. **(government) securities:** holding (by the Fed) that affect money supply & ==earn interest==
2. **(discount) loan:** provide reverse to the banks
:::
### liability
- currency in circulation(通貨淨額)
- reverse(準備金)
:::success
1. **currency in circulation:** in the hand of public 
2. **reverse:** banks deposits at the Fed and vault cash 
**note :** all banks have ==accounts== in Fed (for ==clearly== and ==maintaining== reverse)
:::
## reverse = required reverse + excess reverse
## government securities
* earn interest 
:::success
 Fed buys securities 
   reverse :arrow_up:(money :arrow_up:)
 Fed sells security 
   reverse :arrow_down:(money :arrow_down:)
:::

## loans (to financial institutions)
1. on action of providing reverse
2. discount rate affects the amount of aggregate loans. It is an asset for the Fed
3. It is a liability for the bank 
## High-power money (money base)
:::warning
B=C+R
MB: money base
C: currency 
R: total reverses in the bank system
:::
M
## open market operation (公開市場操作)
1. trade with primary dealer (in Taiwan 中央公債主要交易商)
2. Fed buys securities 100M(banks sell securities 100M)
3. Fed sells securities 100M(banks buy securities 100M)
**買債卷等於創造基礎貨幣**
4. A person withdraw money from a bank 
## Fed provides loans to financial institution
:::success
reverse:arrow_up: MB:arrow_up:
:::

## other factors affecting money base 
1. float: credit first before check clearing 
2. intervention in the foreign exchange market
3. treasury deposit in banks 
## Fed's ability to control money base 
1. open market operation are controlled by the Fed
2. loans (borrowings)to the banks are not controlled by the Fed 
3. MB=MB~n~+BR
    - MB~n~: non borrowing monetary base 
    - BR: borrowed reserves
## deposit creation : simple bank
1. Fed purchases security from ==First National Bank==(FNB)
歸屬為超額準備
1. FNB provides loans to "Yu"
then "Yu" writes a check of 100M to Joe 
1. Joe can save the check into a bank 
In sum, the Fed buy security:arrow_right: D:up: MS:up:
1. If Joe puts money into bank A
FNB pay the amount 
1. Steve put money into bank A
## Factors that determine the money supply 
1. Non-borrowed monetary base (MBn):
:::success
MB~A~:arrow_up: then MS:arrow_up:
recall MB=MB~n~+BR
:::
2. borrowed reserves (BR) : 
BR:arrow_up: then MS:arrow_up:
3. required reserve ratio :
rr:arrow_up: then MS:arrow_down:
4. currency holding 
c.holding:arrow_up: then MS:arrow_down:
5. excess reserves 
excess res.:arrow_up: then MS:arrow_down:
## Money multiplier
1. functions 
:::warning
1. M=C+D
M for M1 
C for currency 
D for deposit

2. Goal : link M and MB by m:

M=m*MB

3. Assume that c=C/D e=ER/D are constant in the long run
4. R=RR+ER
RR=rr*D
:::
2. example
:::info
1. rr=0.1 c=1200B D=1600B ER=2500B
M=C+D
 =1200B+1600B=2800B
MB=C+R=C+RR+ER
  =1200B+(0.1*1600B)+2500B
  =3860B
  m=M/MB
  2800B/3860B
  =0.7253
2. in this example 0<m<1
low m because of high c and high e 
3. the effect of c  on m
m=1+c/rr+e+c  
$$\frac{\Delta m}{\Delta c}=\frac{(rr+e)-1}{(rr+e+c)^2}=K $$
if rr+e>1 K>0
if rr+e<1 K<0
1.try$$\frac{\Delta m}{\Delta rr}$$
$$\frac{\Delta m}{\Delta e}$$
:::
## Quantitative Easily(QE)
lending and asset-purchasing programs which explained largely base  

