Exchange Rate Systems QUESTIONS 3. What is likely to be the most credible exchange rate system? Answer: Among fixed exchange rate systems‚ a monetary union with a common currency is likely the most credible exchange rate system. 8. How can a central bank peg the value of its currency relative to another currency? Answer: To peg the value of its currency to another currency‚ the government must make a market in the two currencies. If there is excess supply of the foreign currency (which is equivalent
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fractional-reserve banking is the near-universal practice of banks of retaining only a fraction of their deposits to satisfy demands for withdrawals‚ lending the remainder at interest to obtain income that can be used to pay interest to depositors and provide profits for the banks’ owners. Fractional-reserve banking allows for the possibility of a bank run in which the depositors collectively attempt to withdraw more money than is in the possession of the bank‚ leading to bankruptcy. It also increases the money
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government. People’s Bank of China (PBC)‚ being the only bank simply received instructions from the government about the allocation of the funds.[1] However‚ things took a change when the four specialized banks namely the Industrial and Commercial Bank of China‚ the Agricultural Bank of China‚ Bank of China and the China Construction Bank were converted into state-owned commercial banks in the late 1970s. With the transformation‚ commercial loans were being made and this brings the banks to the issue on
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market operation: An open market operation is a kind of activity performed by the central bank to sale and purchase the govt. bonds which in directly contract and expands the money supply. Basically it is the tool which affects the federal funds rate it increases or decreases it. It is the most important tool of monetary policy. When the central bank purchases the securities it enhances the reserves of the commercial bank and in this way the can lend more money. By this act the interest rate goes down
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Bank “A financial institution that accepts deposits‚ extends credit‚ and channels the money into lending activities. It generates profits from transaction fees on financial services and on the interest it charges for lending.” Significance of Banking Banking is one of the most sensitive businesses all over the world. Banks play very important role in the economy of a country and Pakistan is no exemption. Banks are custodian to the assets of the general masses. The banking sector plays
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MIDTERM REVIEW QUESTIONS NOVEMBER 2010: Zahlungsbilanz und Devisenmarkt (1) What accounts for most of the activity in the foreign exchange market? (a) Inter-bank trading (b) Government transfers (c) Sale of good and services (d) Government purchase of assets (e) Foreign imports Answer: A (2) A country’s current account (a) balance equals the change in its net foreign wealth. (b) balance equals the change in its foreign wealth. (c) surplus equals the change in its foreign wealth. (d)
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is also known as the central banking system of the United States. The Federal Reserve System is run by the Board of Governors‚ and is composed of 12 regional banks. The Federal Reserve Bank is independent of political pressure decisions that a government influenced by political pressures cannot make. Adjusting the Discount Rate and Effects on the Interest Rates The discount rate is known as the rate of interest the Federal Reserve System (Fed) charges for loans made to banks. The Federal Reserve
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implementation” Undertaken At State Bank of India‚ Main Branch‚ Dharwad Internal Guide Prof: Prashanth.C Faculty KLE’s IMSR Company Guide Mr.Subramanya Chief Manager State Bank of India 1 KLE’s Institute of Manageent Studies of Research MBA IV Sem The Analysis of Basel Norms and Implementation Hubli Dharwad DECLARATION I‚ Miss Shveta.R.Chikkamath hereby declare that the project for MCP title “ The Study of Basel Norms and its implementation” at State Bank of India‚ Main Branch Dharwad
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was passed and signed into a law‚ under the presidency of Woodrow Wilson that established the Federal Reserve Bank and made the Federal Reserve System a crucial aspect of the United States’ government. The Federal Reserve System is contemplated to be an independent central bank; however‚ is sometimes referred to as "independent within the government” and is considered to be the central bank of United States. Ever since 1913‚ the United States of America has relied on its Federal Reserve System to control
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inflation. #6 What is meant when economists say that the Federal Reserve Banks are central banks‚ quasi-public banks and banker’s banks? They are central banks whose policies are coordinated by the Board of Governors. They are quasi-public banks because they are privately owned but have public control. They are banker’s banks because they perform the same functions for thrifts and banks as are performed by the banks to the public. What are the seven basic functions of the Federal Reserve System
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