完整Fabozzi金融市场与金融机构基础课后答案.docx

1、完整Fabozzi金融市场与金融机构基础课后答案2021年7月30日 星期五 多云 文档名称：(完整word版)Fabozzi_金融市场与金融机构基础课后答案文档作者：凯帆 创作时间：2021.07.30CHAPTER 4THE U.S. FEDERAL RESERVE AND THE CREATION OF MONEYCENTRAL BANKS AND THEIR PURPOSEThe primary role of a central bank is to maintain the stability of the currency and money supply for a count

2、ry or a group of countries. The role of central banks can be categorized as: (1) risk assessment, (2) risk reduction, (3) oversight of payment systems, (4) crisis management. One of the major ways a central bank accomplishes its goals is through monetary policy. For this reason, central banks are so

3、metimes called monetary authority. In implementing monetary policy, central banks, acting as a reserve bank, require private banks to maintain and deposit the required reserves with the central bank. In times of financial crisis, central banks perform the role of lender of last resort for the bankin

4、g system. Countries throughout the world may have central banks. Additionally, the European Central Bank is responsible for implementing monetary policy for the member countries of the European Union. There is widespread agreement that central banks should be independent of the government so that de

5、cisions of the central bank will not be influenced for short-term political purposes such as pursuing a monetary policy to expand the economy but at the expense of inflation. In implementing monetary and economic policies, the United States is a member of an informal network of nations. This group s

6、tarted in 1976 as the Group of 6, or G6: US, France, Germany, UK, Italy, and Japan. Thereafter, Canada joined to for the G7. In 1998, Russia joined to form the G8. THE CENTRAL BANK OF THE UNITED STATES: THE FEDERAL RESERVE SYSTEMThe Federal Reserve System consists of 12 banking districts covering th

7、e entire country. Created in 1913, the Federal Reserve is the government agency responsible for the management of the US monetary and banking systems. It is independent of the political branches of government. The Fed is managed by a seven-member Board of Governors, who are appointed by the Presiden

8、t and approved by Congress. The Feds tools for monetary management have been made more difficult by financial innovations. The publics increasing acceptance of money market mutual funds has funneled a large amount of money into what are essentially interest-bearing checking accounts. Securitization

9、permits commercial banks to change what once were illiquid consumer loans of several varieties into securities. Selling these securities gives the banks a source of funding that is outside the Feds influence. INSTRUMENT OF MONETARY POLICY: HOW THE FED INFLUENCES THE SUPPLY OF MONEY The Fed has three

10、 instruments at its disposal to affect the level of reserves. Reserve RequirementsUnder our fractional reserve banking system have to maintain specified fractional amounts of reserves against their deposits. The Fed can raise or lower these required reserve ratios, thereby permitting banks to decrea

11、se or increase their lending and investment portfolios. A banks total reserves equal its required reserves plus any excess reserves. Open Market Operations The Feds most powerful instrument is its authority to conduct open market operation. It buys and sells in open debt markets government securitie

12、s for its own accounts. The Fed prefers to use Treasury bills because it can make its substantial transactions without seriously disrupting the prices or yields of bills. The Federal Open Market Committee, or FOMC, is the unit that decides on the general issues of changing the rate of growth in the

13、money supply, by open market sales or purchases of securities. The implementation of policy through open market operations is the responsibility of the trading desk of the Federal Reserve Bank of New York. Open Market Repurchase Agreements The Fed often employs variants of simple open market purchas

14、es and sales, these are called the repurchase agreement (or repo) and the reverse repo. In a repo, the Fed buys a particular amount of securities from a seller that agrees to repurchase the same number of securities for a higher price at some future time. In a reverse repo, the Fed sells securities

15、and makes a commitment to buy them back at a higher price later. Discount Rate A bank borrowing from the Fed is said to use the discount window. The discount rate is the rate charged to banks borrowing directly from the Fed. Raising the rate is designed to discourage such borrowing, while lowering s

16、hould have the opposite effect.DIFFERENT KINDS OF MONEY Money is that item which serves as a numeraire. In a basic sense money can be defined as anything that serves as a unit of account and medium of exchange. We measure prices in dollars and exchange dollars for goods. Hence coins, currency, and a

17、ny items readily exchanged into dollars (checking deposits or NOW accounts) constitute our money supply.MONEY AND MONETARY AGGREGATESMonetary aggregates measure the amount of money available to the economy at any time. The monetary base is defined as currency in circulation (coins and federal reserv

18、e notes) and reserves in the banking system. The instruments that serve as a medium of exchange can be narrowly defined as M1, which is currency and demand deposits. M2 is M1 plus time and savings accounts, and money market mutual funds. Finally, M3 is M2 plus short-term Treasury liabilities. While

19、all three aggregates are watched and monitored, M1 is the most common form of the money supply, with its trait as being the most liquid. The ratio of the money supply to the economys income is known as the velocity of money. THE MONEY MULTIPIER: THE EXPANSION OF THE MONEY SUPPLYThe money multiplier

20、effect arises from the fact that a small change in reserves can produce a large change in the money supply. Through our fractional reserve system, a small increase will allow an individual bank, to lend out the greater part of these additional funds. These loans subsequently become deposits in other

21、 banks allowing them to expand proportionately. So, while one bank can expand its loans (or deposits) by an amount 1% of reserves required, all banks in the system can do likewise. Thus, in a simple format total change in deposits can be stated as change in reserves divided by the reserve requiremen

22、t, which is also the formula for perpetuity. For example, if the change in the level of reserves is $100 and the reserve requirement is 20%, the change in total deposits will be $500 for a multiplier of 5. Of course, major assumptions are that banks will fully loan out their excess reserves and that

23、 depositors will not withdraw any of these extra reserves.THE IMPACT OF INTEREST RATES ON THE MONEY SUPPLY High rates of interest may make keeping excess reserves costly, since unused funds represent loans not made and interest not earned. High rates of interest will also affect the publics demand f

24、or holding cash. If deposits pay competitive interest rates, customers will be more willing to hold such bank liabilities and less cash. Therefore, a higher rate of interest can actually spur growth of the money supply. More likely, however, it will deter borrowing and slow monetary growth. THE MONE

25、Y SUPPLY PROCESS IN AN OPEN ECONOMY In the modern era, almost every country has an open economy. Foreign commercial and central banks hold dollar accounts in the United States. Their purchases and sales of these deposits can affect exchange rates of the dollar against their own currency. The Fed has

26、 responsibility for maintaining stability in exchange rates. A purchase of foreign exchange with dollars depreciates the dollars value, but it also adds dollars to the accounts of foreign banks in this country, thus adding to the U.S. monetary base. Most central banks of large economies own or stand

27、 ready to own a large amount of each of the worlds major currencies, which are considered international reserves. Sales of foreign exchange transactions have monetary base implication and hence consequences for the domestic money supply, emphasis is given to coordinating monetary policies among deve

28、loped nations. ANSWERS TO QUESTIONS FOR CHAPTER 4(Questions are in bold print followed by answers.)1. What is the role of a central bank?The role of a central bank has several functions: risk assessment, risk reduction, oversight of payment systems, and crisis management. It can do this through mone

29、tary policies, and through the implementation of regulations. 2. Why is it argued that a central bank should be independent of the government?Central banks should be independent of the short-term political interests and political influences generally in setting economic policies. 3. Identify each pa

30、rticipant and its role in the process by which the money supply changes and monetary policy is implemented.The Fed determines monetary policy and seeks to implement it through changes in reserves. It is up to the nations banking system to act on changes in reserves thereby affecting deposits, which

31、constitute the greater part of the M1 definition of the money supply.4. Describe the structure of the board of governors of the Federal Reserve System.The Board of Governors of the Federal Reserve System consists of 7 members who are appointed to staggered 14-year terms. The Board reviews discount o

32、perations and sets legal reserve requirements. In addition, all 7 members of the Board serve on the Federal Open Market Committee (FOMC), which determines the direction and magnitude of open-market operations. Such operations constitute the key instrument for implementing monetary policy.5.a.Explain what is meant by the statement “the United States has a fractional reserve banking system.”b.How are these items related: total reserves, required reserves, and excess reserves?a.A fractional reserve system requires that a fraction or percent of a bank