New answers tagged central-banking
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Banks must manage the flow of reserves to settle payments via the inter-bank payment process. When a bank makes a new loan it debits portfolio asset for an increase and credits transaction deposits (checking account) of the borrower for an increase. If borrower spends funds to a customer of another bank then reserve balances issued by Fed will flow to the ...
3
Demand deposits might be cheaper, but they can disappear due to withdrawals. Banks also need stable sources of longer-term funding to match against their illiquid assets. Holding reserves is only of limited economic importance relative to the need to widen funding sources.
CD’s are cheap relative to other sources of term funding. It would be very hard to ...
3
I am unsure about the American situation, but I learned a bit of history about token issuance in pre-Confederation Canada. These comments are based on the notes in a token collector guide.
Since they were privately issued, they would be called “tokens” and not “coins,” as that was reserved for governmental issuance.
In the Canadian colonies, there was a ...
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The function of a bank is to take in assets and create loans.
If a bank doesn't have as many assets, especially money, it can't create as many loans.
One major way that banks get assets is when people give them their money for safe-keeping.
If people didn't need to give their money to banks for safe-keeping, banks would have a lot less money. Therefore, they ...
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