第二章 Money, banking and the economy
1）Function of money
1. Medium of exchange
2. Store of value
3. A unit of account (standard of value)
4. Standard of deferred payment
2）Characteristic of money
1. Portability
2. Divisibility
3. Homogeneity and identifiability
4. Durability
5. Scarcity
6. Purchasing power stability
3）Type of money
1. Token money
2. Cheque account deposits
3. Commodity money
4）Cheque itself is not “money”; it is only the amount of money in the relevant account, which is considered to be “money”.
5）A required reserve ratio is a fraction of the deposits of the public that a bank hold in reserves; that is, the minimum amount of reserves a bank must, by law, keep either in currency or in deposits with the central bank.
6）Money multiplier=1/R
7） M1: the sum of legal tender coins and notes held by the public +the customers’ demand deposits placed with licensed bank
M2: the sum of M1+customer’s saving and time deposits with licensed banks + negotiable certificates of deposits (NCDs) issued by licensed banks held outside the banking sector
M3: the sum of M2+customer deposits with restricted license bank (RLB) and deposit-taking companies (DTCs) +negotiable certificate of deposits (NCDs) issued by these institutions held outside the banking sector.
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