regulating the banking sector (L16) Flashcards
1
Q
official measure of money
A
m4=c+d
2
Q
mb
monetary base
A
ctot + r
currency in circulation+ reserves
3
Q
money multiplier
mm
A
mm=M4/MB
ratio of ‘broad money’ to CB money
indicates private money creation
4
Q
how can central bank influence money creation
A
open market creations
interest rates
regulation of financial institutions
5
Q
macro prudential regulation
A
requires banks to ensure that bank capital (equity) remains above a minimum threshold