burda & wyplosz macroeconomics 3 rd edn oxford university press table 9.1 balance sheet of the...

Burda & Wyplosz Macroeconomics 3rd ednOXFORDUNIVERSITY PRESS

Table 9.1

Gold and foreign reserves 459.0 Currency in circulation 373.5Claims on governments 112.8 Reserves held by

commercial banks113.1

Claims on banks and financial institutions

481.7 Other deposits by banks and financial institutions

233.0

Other assets 76.3 Government deposits 58.1Other liabilities 130.0

Net worth 222.1

Total 1129.8 Total 1129.8

Assets Liabilities

Balance sheet of the European Central Bank(September 2000)

Source: Monthly Bulletin, ECB, November 2000


Table 9.2

M0 M2 Multiplier Currency(% of GDP) (% of GDP) M2/M0 (% of M2)

Japan 14.9% 128.4% 8.6 9.9% USA 6.0% 11.0% 1.8 54.4% Eurozone 5.8% 31.0% 3.1 18.7% UK 3.7% 61.9% 16.9 5.9%

M0, M2, money market multipliers and currency(2000)


Table 9.3

Theoretical values of the money multiplier (M1/M0)

Currency/M1 5% 10% 20%

0% 20.0 10.0 5.0 5% 10.3 6.9 4.2

10% 6.9 5.3 3.6 20% 4.2 3.6 2.8 30% 3.0 2.7 2.3

Reserve ratio = rr


Table 9.4

Seigniorage around the world

1980 91 1992-95 1980 91 1992-95

Advanced Economies 0.8 0.3 7.2 3.3 US 0.4 0.4 5.4 2.8 Germany 0.5 0.3 2.9 3.5 Japan 0.6 0.3 2.6 0.9

Hungary 0.4 4.1 12.7 23.1 Poland 7.0 2.2 99.5 34.6 Israel 1.9 0.5 111.1 11.3

Africa 1.4 1.3 19.6 22.2 Asia 1.5 2.0 7.6 7.1 Latin America 3.2 2.4 251.4 110.1

Seigniorage Inflation

Source: Masson, Savastano and Sahrma (1998)


Table 9.5

Coverage of deposits Coverage of deposits

Austria 20 000 Iceland 20 000Belgium 20 000 Italy 103 000Denmark 40 000 Netherlands 20 000Finland 25 000 Norway 250 000

France 60 000 Portugal 25 000Germany 90% up to ceiling 20 000 Sweden 25 000Greece 20 000 Spain 20 000Ireland 90% up to ceiling 20 000 UK 90% up to ceiling 22 000

Bank insurance


Figure 9.1

Monetary policy procedures

(a) Money targeting (b) Interest rate targeting

Supply of base money (M0)

Inte

rest

rat

e

Inte

rest

rat

eSupply of base money

(M0)

Supply

Supply

DemandDemand


Where’sM0?

Foreign assets

Loans to comm. banks

Claims on governments

Reserves of commercial

banks

Bank notes held by nonbanks

Deposits of government

Net worth Deposits of

private sector

Deposits of government

Real assets, incl. net worth of

banking sector

Government and private debt

Net worth

Vault cash and reserves at

Central Bank

Loans and securities

Liabilities to Central Bank

Deposits of private sector

Net worth

Bank notes held by nonbanks

Central BankConsolidated Government

and Nonbank Private Sector

Commercial Banks

Assets Liabilities

Assets Liabilities

Assets Liabilities

Figure 9.2


Figure 9.3

Reserves-money stock link

Reserves

Deposits

change in reserves

change indeposits


Figure 9.4

Reserves-money stock link with currency

change in reserves

change indeposits

Currency Reserves

DepositsCurrency

M0

M1


Figure 9.5

The money market

Monetary base (M0)

Inte

rest

rat

e

0

D

A

B

D

C


1999 20000

2

4

6lending

EONIA

refinancing

deposit

EONIA = euro overnight index average

ECB interest rates

Figure 9.6


Figure 9.7

Bank of England’s Fan(inflation forecasts as of November 2000)

Percentage increase in prices on a year earlier

Source: Inflation Report, Bank of England, November 2000


Figure 9.8

Foreign exchange market interventionand sterilization

Foreign exchange Monetary base-80,000,000 -80,000,000

Danmarks Nationalbank

Assets Liabilities

Foreign exchange Monetary base-80,000,000 (no change)

Government bonds80,000,000

Danmarks Nationalbank

Assets Liabilities


Figure 9.9

Assets Liabilities

Central bank reserves Deposits

Net worthLoans and securities Tier 1 (primary) capital

Tier 2 (secondary) capital

Typical Commercial Bank, SA

Reserve and capital adequacy ratios

burda & wyplosz macroeconomics 3 rd edn oxford university press table 9.1 balance sheet of the...

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