《宏观经济学》（双语版）MONEY SUPPLY

How banks create 息自音 L money

How banks create money

What is money ? Notes Currenc现金 oins C? ent deposits(活期存款) other deposits with banks(银行的其它存款) M3=C +D

What is money? • Notes • Coins • Current deposits （活期存款） • other deposits with banks（银行的其它存款） Currency(现金) M3 = C + D

A world without any banks C=$100 D=SO The supply of money is $100

A world without any banks The supply of money is $100. • C= $100 • D= $0

The first bank ASSETS(资 LIABILITIES(负) Reserves $100 Deposits $100 C= SO D=S100 M=S100

The First Bank Reserves $100 Deposits $100 ASSETS(资产) LIABILITIES（负债） C= $ 0 D= $100 M= $100

Summary If banks hold all deposits in reserve. banks do not influence the supply of money. 如果银行持有100%准备金,银行不 影响货币的供给。 O,△

If banks hold all deposits in reserve, banks do not influence the supply of money. 如果银行持有100%准备金，银行不 影响货币的供给。 Summary

Why not use some of money to make loans

Why not use some of money to make loans ?

Let 's suppose that The First Bank decides to keep 10%o of its deposits in reserve and to loan out the rest 0% is called reserve ratio(谁各金率)

• Let’s suppose that The First Bank decides to keep 10% of its deposits in reserve and to loan out the rest. • 10% is called reserve ratio（准备金率）

Reserve ratio is the fraction of deposits that banks hold as reserves 准备金率是准备金占存款的比率 R= Reserves/ deposits=准备金存款额 一般由中央银行规定。所以通常叫 法定准备金率( required reserve ratio)

• Reserve ratio is the fraction of deposits that banks hold as reserves. • 准备金率是准备金占存款的比率 • R=Reserves/deposits=准备金/存款额 • 一般由中央银行规定，所以通常叫 法定准备金率（required reserve ratio）

Now let's look at the balance sheet of The First Bank again The First Bank ASSETS LIABILITES Reserves 10%*S100=S10 Deposits S100 Loans 90%*S100=S90 D=S100 M=S190 The First Bank creates an additionals 90 of money

Now let’s look at the balance sheet of The First Bank again. Reserves 10%*$100= $ 10 Deposits $100 Loans 90%*$100= $ 90 D= $100 C= $ 90 M= $ 190 The First Bank creates an additional $ 90 of money. ASSETS LIABILITIES The First Bank

Summary When banks hold only a fraction of deposits in reserve, banks create money. 如果银行只持有部分准备金,银行创 造了货而,银行新创造的货而额 刚好等于银行提供的贷款额。 业們业们

When banks hold only a fraction of deposits in reserve, banks create money. 如果银行只持有部分准备金，银行创 造了货币，银行新创造的货币额， 刚好等于银行提供的贷款额。 Summary