Post on 22-Nov-2014
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Money
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Ten Principles of Economics Ⅰ.How People Make Decisions. 1:People Face Trade-‐offs. 2:The Cost of Something Is What You Give Up to Get It. 3:RaIonal People Think at the Margin. 4:People Respond to IncenIves. Ⅱ.How People Interact. 5:Trade Can Make Everyone BeNer Off. 6:Markets Are Usually a Goodway to Organize Economic AcIvity. 7:Governments Can SomeImes Improve Market Outcomes. Ⅲ.How the Economy as a Whole Works 8:A Country's Standard of Living Depends on its Ability to Produce Goods and Services. 9:Prices Rise When the Government Prints Too Much Money. 10:Society Faces a Short-‐Run Trade-‐off between InflaGon and Umemployment.
What is money?
What is the role of money?
Money in economcis
• The term money refers to assets that people regularly use to buy goods and services. – As a medium of exchange, it provides the item used to make transacIon.
– As a unit account, it provides the way in which prices and other economic values are recorded.
– As a store of value, it provides a way of transferring purchasing power from the present to the future.
Central Bank
• An insItuIon designed to oversee the banking system and regulate the quanIty of money in the economy.
• Central bank has two related jobs. – The first is to regulate banks and ensure the health of the banking system.
– The second and more important job is to control the quanIty of money that is made available in the economy, called the money supply.
Monetary policy
• Decisions by policy makers concerning the money supply consItute monetary policy.
• Central bank’s primary tool is the open market operaIons. – If the FOMC decides to increase the money supply, central bank creates dollar’s and uses them to buy government bond’s from the public in the naIon’s bond markets.
How do money transmit to the public by monetary policy?
Transmission mechanism of monetary policy
Central bank
Bank Bank Bank Bank
Open Market
Company Company Individual individual
Government bond
Money lending
Principal and interests
TradiIonal monetary policy
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金融政策波及経路 オペレーション
中央銀行当座預金
オーバーナイト金利 貸出供給 資産価格 為替レート
担保価格
総支出
予想物価上昇率 中長期金利
実質長中長期金利
相対資産価格
金利チャネル
信用チャネル 為替チャネル
マネタリストチャネル
量的緩和チャネル
InflaIon targeIng
• Under inflaIon targeIng , central bank would announce a target for a the inflaIon rate and then adjust the money supply when the actual inflaIon rate deviates from the target.
• In addiIon, an inflaIon target has the poliIcal advantage of being easy to explain to the public.
2013/07/21
QuanItaIve easing (QE) • QuanItaIve easing (QE) is an unconvenIonal monetary
policy used by central banks to sImulate the naIonal economy when convenIonal monetary policy has become ineffecIve.
• A central bank implements quanItaIve easing by buying financial assets from commercial banks and other private insItuIons with newly created money in order to inject a pre-‐determined quanIty of money into the economy.
• This is disInguished from the more usual policy of buying or selling government bonds to keep market interest rates at a specified target value.QuanItaIve easing increases the excess reserves of the banks, and raises the prices of the financial assets bought, which lowers their yield.