Total borrowings in millions of dollars from the Federal Reserve are borrowings from the discount window's primary, secondary, and seasonal credit programs and other borrowings from emergency lending facilities. For borrowings included, see "Loans" in table 1 of the H. Nonborrowed reserves equal total reserves less total borrowings from the Federal Reserve.
Billions of dollars. Currency consists of Federal Reserve notes and coin outside the U. Treasury, Federal Reserve Banks, and the vaults of depository institutions.
And the person they lend it to, let's say that they immediately go and deposit it into another bank. So they immediately go and deposit this in private bank, I'll call this private bank two. So it's no longer in private bank one. Let me draw a private bank two. Private bank two is a right over here. Private bank number two. And they deposit it into a savings account in private bank number two. And let's say all of this, out of all of this, the bank says, well, this is a demand deposit, I have to keep some reserves.
This is a fractional reserve system. So these two also end up in private bank number two. And now here in private bank number two-- and let's say these are deposited in a checking account.
These are deposited right over here in a checking account. Now private bank number two, it can do a couple of things. In this checking account it has to keep some reserves. Let's say it's even more conservative.
And so it lends out one of these dollars. And the person that they lend it to just takes that dollar and they put it in their wallet. So they just put it in their wallet.
And they could also lend out this entire savings. One, two, three, four. Now let's think about the different forms of money there are here. Well, we could think of money in a very, very narrow way, which is just what did the Central Bank print, or create electronically as electronic reserves of its member banks?
But for simplicity here you can just think about the physical currency that it printed, its base money. And so that, often, is just referred to as base money. And in the US and other countries it's often the same thing as M0. There's slight differences from country to country. It could be used to facilitate transactions. Now that clearly isn't all of the stuff that can be used as money in this little universe we created. And so we can have a slightly broader definition of money.
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I Accept Show Purposes. Your Money. Personal Finance. Your Practice. Popular Courses. Economy Monetary Policy. What is M2? Key Takeaways M2 is a measure of the money supply that includes cash, checking deposits, and easily convertible near money. Accordingly, the composition of M2 between M1 and non-M1 components conveys little economic information. Suggested by David Andolfatto and Joel Steinberg. Your trusted data source since Posted on January 11, Search for:. The views expressed are those of individual authors and do not necessarily reflect official positions of the Federal Reserve Bank of St.
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