第二章 Money, banking and the economy
l Function of money
1. Medium of exchange
2. Store of value
3. A unit of account (standard of value)
4. Standard of deferred payment
l Characteristic of money
1. Portability
2. Divisibility
3. Homogeneity and identifiability
4. Durability
5. Scarcity
6. Purchasing power stability
l Type of money
1. Token money
2. Cheque account deposits
3. Commodity money
l Cheque itself is not “money”; it is only the amount of money in the relevant account, which is considered to be “money”.
l A required reserve ratio is a fraction of the deposits of the public that a bank hold in reserves; that is, the minimum amount of reserves a bank must, by law, keep either in currency or in deposits with the central bank.
l Money multiplier=1/R
l M1: the sum of legal tender coins and notes held by the public +the customers' demand deposits placed with licensed bank
M2: the sum of M1+customer's saving and time deposits with licensed banks + negotiable certificates of deposits (NCDs) issued by licensed banks held outside the banking sector
M3: the sum of M2+customer deposits with restricted license bank (RLB) and deposit-taking companies (DTCs) +negotiable certificate of deposits (NCDs) issued by these institutions held outside the banking sector.
l Function of money
1. Medium of exchange
2. Store of value
3. A unit of account (standard of value)
4. Standard of deferred payment
l Characteristic of money
1. Portability
2. Divisibility
3. Homogeneity and identifiability
4. Durability
5. Scarcity
6. Purchasing power stability
l Type of money
1. Token money
2. Cheque account deposits
3. Commodity money
l Cheque itself is not “money”; it is only the amount of money in the relevant account, which is considered to be “money”.
l A required reserve ratio is a fraction of the deposits of the public that a bank hold in reserves; that is, the minimum amount of reserves a bank must, by law, keep either in currency or in deposits with the central bank.
l Money multiplier=1/R
l M1: the sum of legal tender coins and notes held by the public +the customers' demand deposits placed with licensed bank
M2: the sum of M1+customer's saving and time deposits with licensed banks + negotiable certificates of deposits (NCDs) issued by licensed banks held outside the banking sector
M3: the sum of M2+customer deposits with restricted license bank (RLB) and deposit-taking companies (DTCs) +negotiable certificate of deposits (NCDs) issued by these institutions held outside the banking sector.