BU111 Chapter Notes - Chapter 6: Prime Rate, Foreign Exchange Spot, Open Market Operation
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BU111 Full Course Notes
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Document Summary
Facilitate the flow of money from sectors with surpluses to those with deficits by attracting funds to savings and chequing accounts. Between individuals businesses and non business organizations. Offer chequing and savings accounts to attract capital for loans. International: currency exchange, credit letter and banker acceptance. Banks create money by lending the deposits they receive after retaining mandatory reserves. Deregulation allows for bankers to think as investment bankers. Consumer demands: people want higher interest payments and wider range of services like bereavement provided by bmo. Manages the economy and regulates chartered banks. Bank rate: rate that chartered banks use when borrowing from the central bank. Money supply: control by open market operations and bank rate. Expansionary policy: increase the money supply by lowering interest rates and buying securities. Restrictive policy: decrease the money supply by raising interest rates and selling securities. Cooperative savings and lending association formed by a group with common interests.
