IshaanBilala
Banned
Money Supply
The money supply comprises currency—notes and coins issued by the central bank and the Treasury—and various kinds of deposits held by the public at commercial banks and other depository institutions such as savings and loans and credit unions.
Monetary Policy
A bank in need of reserves can borrow reserve balances on deposit in the Fed from other banks. Loans are made for one day at a time in the "federal funds" market. Interest rates on these loans are quoted continuously. Central bank open-market operations are interventions in this market. When the Federal Reserve (or other central bank) conducts an open-market operation, it typically buys treasury bills, paying for them with reserves, or sells them, taking reserves in payment. Open-market operations thus amount to interventions in the federal funds market. Banks can also borrow from the Federal Reserve banks themselves, at their announced discount rates, which are in practice the same at all twelve banks. Nowadays it is secondary to open-market operations, and the Fed generally keeps the discount rate close to the federal funds market rate. However, announcing a new discount rate is often a convenient way to send a message to the money markets. In addition to its responsibilities for macroeconomic stabilization, the central bank has a traditional safety-net role in temporarily assisting individual banks and in preventing or stemming systemic panics as "lender of last resort.".
Financial Regulation
Financial institutions serve various purposes. Depository institutions (banks, savings and loans [S&Ls], and credit unions) transform liquid liabilities (checking accounts, savings accounts, and certificates of deposit that can be cashed in prior to maturity) into relatively illiquid assets, such as home mortgages, car loans, loans to finance business inventories and accounts receivable, and credit card balances. Depository institutions also operate the payments system where bank balances are shifted between parties through checks, wire transfers, and credit and debit card transactions. Insurance companies fall into two broad categories--life and health insurers, whose policies provide financial protection against death, disability, and medical bills; and property and casualty insurers, whose policies protect policyholders against losses arising from fire, natural disasters, accidents, fraud, and other calamities. Stockbrokers and related investment banking firms are central players in the capital markets where businesses raise capital and where individuals and institutional investors buy and sell shares of stock in business enterprises.
The money supply comprises currency—notes and coins issued by the central bank and the Treasury—and various kinds of deposits held by the public at commercial banks and other depository institutions such as savings and loans and credit unions.
Monetary Policy
A bank in need of reserves can borrow reserve balances on deposit in the Fed from other banks. Loans are made for one day at a time in the "federal funds" market. Interest rates on these loans are quoted continuously. Central bank open-market operations are interventions in this market. When the Federal Reserve (or other central bank) conducts an open-market operation, it typically buys treasury bills, paying for them with reserves, or sells them, taking reserves in payment. Open-market operations thus amount to interventions in the federal funds market. Banks can also borrow from the Federal Reserve banks themselves, at their announced discount rates, which are in practice the same at all twelve banks. Nowadays it is secondary to open-market operations, and the Fed generally keeps the discount rate close to the federal funds market rate. However, announcing a new discount rate is often a convenient way to send a message to the money markets. In addition to its responsibilities for macroeconomic stabilization, the central bank has a traditional safety-net role in temporarily assisting individual banks and in preventing or stemming systemic panics as "lender of last resort.".
Financial Regulation
Financial institutions serve various purposes. Depository institutions (banks, savings and loans [S&Ls], and credit unions) transform liquid liabilities (checking accounts, savings accounts, and certificates of deposit that can be cashed in prior to maturity) into relatively illiquid assets, such as home mortgages, car loans, loans to finance business inventories and accounts receivable, and credit card balances. Depository institutions also operate the payments system where bank balances are shifted between parties through checks, wire transfers, and credit and debit card transactions. Insurance companies fall into two broad categories--life and health insurers, whose policies provide financial protection against death, disability, and medical bills; and property and casualty insurers, whose policies protect policyholders against losses arising from fire, natural disasters, accidents, fraud, and other calamities. Stockbrokers and related investment banking firms are central players in the capital markets where businesses raise capital and where individuals and institutional investors buy and sell shares of stock in business enterprises.