RSM230H1 Lecture Notes - Lecture 2: Fiat Money, Stephen Poloz, Federal Reserve System
22 Sep 2016
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Actions affect interest rates, credit, money supply, inflation. Development of commercial lending (surplus can be more profitably lent out) The more the deposits, the higher the security costs: therefore, its more profitable to lend it out to merchants or states so they can invest in larger investments. We can create currency (took a long time) Pay them with the receipt (token or a tablet: currency is based on a transferrable deposit slip. Payments: just need to change the numbers of the ledger, most payments are done by ledger system. Monetary policy: how to manage money supply. Financial stability: provide stability to the payment system, acting as last resort (now) Government"s banker: government needs to move money around. When you have all the same payment systems in the same bank, it is easy to move money between accounts. How do you move money from bank 1 -> bank 2.
