EC223 Lecture Notes - Lecture 5: Disintermediation
Document Summary
Central bank a government institution that has responsibility for the amount of money and credit supplied in the economy as a whole. Dual banking system where banks supervised by the federal government and banks supervised by the states operate side by side. Gold standard where a country"s currency is convertible directly into gold. Shadow banking system where bank lending has been replaced by lending via the securities markets. A change in the financial environment will stimulate a search by financial institutions for innovations that are likely to be profitable. Virtual bank a bank that has no physical location but rather exists only in cyberspace. Disintermediation restricting the amount of funds that banks can lend. Sweep account an arrangement where any balances above a certain amount in a chequing account at the end of a business day are. Swept out of the account and invested in overnight securities that pay interest.