Many concerns have materialized due to the announcement made by China that banks ought to hold extra deposits with the Central Bank. This implied that banks are denied the opportunity to amass funds instead of lending them out. …
Download file to see previous pages...
The effect of increased bank deposits ration with Chinese Central Bank
If Chinese banks make more deposits with the central, the level of their total assets increase by the amount of deposits made to the central bank. Consequently, the central bank’s liabilities increase by the same amount of banks deposits. In most cases, the move will ensure that excess reserves within the banking system are reduced. In fact, banks will have to reduce their lending to households and firms by an equivalent amount deposited with the central bank. This policy measure could be realized if the central bank opts to sell bonds to banks from its portfolio to reduce excess reserves. For instance, the central bank might sell government bonds from available portfolios and the bonds could in turn be purchased by Chinese commercial banks. When banks make bonds payments by depositing an equivalent amount in reserves to the central bank, banks liabilities will increase by the amount of deposits made to the central whereas assets will increase by the amount of interest bearing bonds. However, the central bank’s assets will increase by the amount of deposits made while the assets will reduce by an equivalent amount of bonds issued.
There are also numerous economic impacts ensuing from the decision made by People’s Central Bank. The effects are apparently depicted on the economic equilibrium (GDP) and expenses incurred. Indeed, the People’s Central Bank decision announcement that banks needs to hold extra deposits with China’s central bank causes considerable economic impact.
...Download file to see next pagesRead More
A rise in the European Central Bank’s targeted inflation rates according to the German government this year. Due to increased holiday accommodation and travel and tourism costs, a 2.3% increase was witnessed in the Consumer Price Index which has led the government to undertake sharp steps such as decreasing the cutting down on interest rates.
The primary focus will be on selected macroeconomic, as well as established issues and key policy choices that could most likely arise in the GCC’s central bank’s processing of monetary integration. However, this does not assess the potential cost and benefits of a GCC monetary union, taking into account that political influence has been considered in the introduction of a single currency, and no analytical options for monetary, as well as the exchange rate policies within the GCC after a single currency implementation have been launched.
The reaction of the markets to this step of ECB was hardly typical as the shares prices rose and euro declined against the dollar within several days after announcement about the rising of the interest rates had been made (However, the reaction of American markets was more typical one as the Dow Jones Stock Index of 600 major European companies fell by 2 points within the several days after the announcement had been made).
The paper also discusses the topic of deflation as a whole and finally the impact of the financial measures of the Central Bank of Japan on in the Japanese economy.
The author approaches the paper with a clear statement of objective in his introduction. He opens out after that with a rather long description about deflation both in the introduction and then again in the second paragraph exclusively devoted to explaining the same (A serious error though is evident in the second page, line four, stating " Two main causes for deflation are stocks to aggregate supply and stocks to aggregate demand".
It has its headquarters in Frankfurt, Germany. (ECB, n.d.)
ECB's main objective is to maintain euro's price stability to keep inflation rate below 2% per year. According to the ECB website, its tasks include: defining and maintaining monetary policy of the euro area; ensuring that the foreign exchange operations remain consistent with the aims of the central bank's monetary policy; promoting smooth operation of payment systems; and holding and managing foreign reserves.
The bank is located in Frankfurt, Germany and was established in 1998. It was set up by the European Union and it effectively replaced the European Monetary Institute. But the design and importance of the central bank can be seen as accruing directly from the Germany Bundesbank.
overed in the gamut are structure for the new bank, point of similarities and dissimilarities with the ECB, arguments in favor of and against of the formation of the new central bank and the objectives to be followed by the proposed central bank.
Since long countries in the GCC
The difference between the two central banks is that the GCB has other decision making bodies which the ECB lacks including the operations committee and the national central banks. Those who argue in support of the GCB
The topic of central bank independence is current and highly significant thus the need to focus on it in academia. In any country, central banking is highly imperative because of the critical roles assigned to it including creation of money.
7 Pages(1750 words)Essay
GOT A TRICKY QUESTION? RECEIVE AN ANSWER FROM STUDENTS LIKE YOU!
Let us find you another Essay on topic The effect of increased bank deposits ration with Chinese Central Bank for FREE!