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Stimulate the financial services sector in order to mitigate the
Stimulate the financial services sector in order to mitigate the

In the compilation of monetary statistics, the two broad approaches
In the compilation of monetary statistics, the two broad approaches

... Following its merger with DBS, POSBank became part of the banking system. Hence, its deposits are treated like those of other banks and are included in the money supply as part of M1 and quasi-money. As a result, POSBank's current account deposits are now included in M1 as demand deposits while its ...
Lecture 12
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... cash deposits, but this is only part of the answer. Banks create money by making loans. When a bank makes a loan, it simply credits a customer’s account with the amount of money being loaned. In effect, the bank is creating money, because these account balances are counted as part of the money suppl ...
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... 1. Discount rate: The interest rate charged by the  Federal Reserve to banks for loans obtained through  the Fed's discount window. 2. Reserve requirements: Funds that Banks must hold as  cash in their vaults or on deposit at a Reserve Bank. 3. Open market operations: Buying and selling  government  ...
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... excess reserves rise by same amount since no checkable deposit was created. • When Fed buys from public, some of the new reserves are required reserves for the new checkable deposits. • Conclusion: When the Fed buys securities, bank reserves will increase and the money supply potentially can rise by ...
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Fractional-reserve banking

Fractional-reserve banking is the practice whereby a bank accepts deposits, and holds reserves that are a fraction of the amount of its deposit liabilities. Reserves are held at the bank as currency, or as deposits in the bank's accounts at the central bank. Fractional-reserve banking is the current form of banking practiced in most countries worldwide.Fractional-reserve banking allows banks to act as financial intermediaries between borrowers and savers, and to provide longer-term loans to borrowers while providing immediate liquidity to depositors (providing the function of maturity transformation). However, a bank can experience a bank run if depositors wish to withdraw more funds than the reserves held by the bank. To mitigate the risks of bank runs and systemic crises (when problems are extreme and widespread), governments of most countries regulate and oversee commercial banks, provide deposit insurance and act as lender of last resort to commercial banks.Because bank deposits are usually considered money in their own right, and because banks hold reserves that are less than their deposit liabilities, fractional-reserve banking permits the money supply to grow beyond the amount of the underlying reserves of base money originally created by the central bank. In most countries, the central bank (or other monetary authority) regulates bank credit creation, imposing reserve requirements and capital adequacy ratios. This can limit the amount of money creation that occurs in the commercial banking system, and helps to ensure that banks are solvent and have enough funds to meet demand for withdrawals. However, rather than directly controlling the money supply, central banks usually pursue an interest rate target to control inflation and bank issuance of credit.
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