Characteristics and Creation of Money

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.
.

. .

(characteristics of money)
. . . (definition of money)

. ..

(functions of money)

(medium of exchange)

(unit of account / standard of value)

(store of value)

(standard
deferred

of

payment)

. . .

(main characteristics of money)

. . . (money and currency)

(money) => (slide 3)

(currency)

(local currency):

(foreign currency):

. . .
.

(evolution of money)

(story of money)

Turkish

(metal coins)

(ancient Egypt)
Lydia

(commodity money)

(fiat money)

( seigniorage )
=

(credit money)
(loan)

(a money substitute)

(deposit)

(credit card loan)

10

.
(money in a cashless system)

(cash):
-

(electronic money):

(credit card)

11

(money creation)

..

(composition of aggregate money supply)

- M0
- M1
- M2
- M3

12

USA
(composition of money supply determined by the
Federal Reserve Bank) M 3

M2
M1

Household
holdings of
The most
savings deposits,
liquid forms of
small time
money,
and
+ deposits,
namely
retail money
currency and
market mutual
checkable
funds.
deposits.

Institutional money
funds and certain
managed liabilities
of depositories,
namely large time
deposits,
+ repurchase
agreements, and
Eurodollars.

13

(composition of money supply determined by the
National Bank of Cambodia)
M1 =

() +

M2 = M1 +

..

() +

()

14

(Principle of money creation)

15

(credit money creation by banks)

(excess reserves)

i.

16

(bank reserves)

(required reserves)

(excess reserves)

17

(required reserves)

=
x

( required reserves = minimum reserve ratio x total deposits)

=

(minimum reserve ratio)

(required reserves)

(total deposits)

18

 (excess reserves)

(excess reserves = bank reserves required reserves)

19

ii. (limits to credit money

creation)

x
1

=
(money multiplier)

(minimum reserve ratio)

20

. (velocity of money)

( )

(velocity of money)

(GDP)

M1

21