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Canada (509,225)
ECON 302 (17)
Tom Velk (17)
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Department
Economics (Arts)
Course
ECON 302
Professor
Tom Velk
Semester
Fall

Description
Why do Banks Operate as Brokers? (According to BIS) • The logic of their argument is: innovations have gone on that are cost­saving and are efficient  from the point of view of finance, certainly included is the computer evolution • These new practices represent a danger/regulatory challenge • These new ways of doing business, however, represent at the same time an enormous  opportunity and increased efficiency in the financial industry • The tools of monetary policy have to be changed or at least the dimensions of monetary policy  have to be changed  • The problem that arises almost immediately is the question of what is money at all. If you're  doing monetary policy in the tradition of Friedman (believer of central bank’s focus on inflation­ control, price­stability via keeping track of how much money there is and what that money was  doing), there are now forces eliminating money altogether  • New policy: no longer aimed at maintaining/guaranteeing liquidity or managing reserves, rather  want to ensure that people behave prudently. What’s the problem? • Banks have lost their competitive advantage to international securities markets Macro­Prudential Policy • (1) T
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