Money supply分为：broad money和narrow money。
Narrow money 指现金+活期存款 (流动性强→用于交易) [即时购买力]，但是商业银行的库存现金分为两部分:
1)用于客户提现 (算在 narrow/broad money 中)
2)用于银行日常开销 (不算在narrow/broad money 中)
Broad money 指 Narrow money + 储蓄存款 + 定期存款 [潜在购买力]
NM过高, BM过低: 需求强劲,投资不足, 有涨价风险NM过低, BM过高: 投资过热,需求不足,有商品积压风险。
Organisationof issue currency：To issue money
Bank ofother commercial banks：
To accept the deposit of other commercial banks, provideloan for commercial banks
Drafter andexecutive of monetary policy ：
To carry out monetary policy to manage the economy
Represent the national/state treasury：
To manage government expenditure, manage the exchangereserve
Asset = Liability + Ownership/Equity
Assets are valuable resources owned by the entity.
第三个是The credit creation，也是考试中经常出现的，往往以计算题的形式。
Reserves are deposits that banks have received but have notloaned out.
Reserve ratio is the fraction of deposits that banks hold asreserves.
Reserverequirements are regulations on the minimumamount of reserves that banks must hold against deposits.
Total deposits created = Initial deposit×(1/Reserve ratio). Created deposit = Total deposit -Initial deposit.Credit multiplier = 1/Reserve ratio Credit multiplier: theamount of money the banking system generates with each dollar of reserves.
1) Government borrows money from central bank orcommercial bank. If a budge deficit is financed by borrowing from commercialbanks or the central bank, the money supply will increase.
When the government borrows $10 million from central orcommercial banks, the government spends $10 million to buy goods. Therecipients of $10 million and pay them into their bank accounts. These depositsincrease the liquid assets. It also increases bank’s ability to lend. Therewill be a multiplied expansion the money supply.
2) Government borrows money from non-bank private sectoror public. If a budget deficit is financed by selling government securities tothe non-bank private sector or public, the money supply will remain unchanged.
When the government sells $10 million securities to thenon-bank private sector or public. Purchasers draw $10 million money out oftheir bank deposits. The government spends the money, recipients will beredeposited to banks. There is no increase in money supply. Existing money justchange hands.
3) If a budget deficit is financed by selling governmentsecurities to the non-bank private sector or public, government don’t spendsthe money, it causes a fall in liquid assets of bank, as money is withdrawn.The lending will fall.
When a government sells securities to the non-bankprivate sector or public. Purchasers draw money out of their bank deposits. Ifgovernment does not spend the money, a fall in liquid assets of bank, as moneyis withdrawn. The lending will fall.
如果政府卖出 bonds, 然后不花作为 reserves → Money supply↓
如果政府赎回 bonds, government has to pay cash to private,increasing the deposits → Money supply↑