ECON 1BB3 Lecture Notes - Lecture 17: Canada Deposit Insurance Corporation, Federal Reserve System, Money Multiplier
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ECON 1BB3 Full Course Notes
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Economics february 25th, 2013 lecture 17. Fractional-reserve banking: a banking system in which a bank holds only a fraction of deposits as reserves. Reserve ratio: fraction of total deposits that a bank holds as reserves. I have ,000 in currency and there is no banking system. Now, i deposit my ,000 into a bank. Money multiplier: the amount of deposits the banking system generates with each dollar of reserves. If is deposited into the banking system what happens to total deposits. Bank of canada is canada"s central bank. Other central banks: bank of england, bank of japan, board of governors of the federal reserve system (us) The bank of canada controls the money supply by: open-market operations: buying and selling government bonds, changing the overnight rate: the government can change the bank rate, which equally changes the overnight rate. Economics february 26th, 2013 lecture 18. Depositors believe that a bank might go bankrupt.