国际金融课件09.ppt

Balance-of-Payments and Exchange Rate Determination Monetary and Portfolio Approaches The Monetary Base A nation’s monetary base can be measured by viewing either the assets or liabilities of the central bank. The assets are domestic credit (DC) and foreign exchange reserves (FER). The liabilities are currency in circulation (C) and total reserves of member banks (TR). Simplified Central Bank Balance Sheet Money Stock There are a number of measures of a nation’s money stock (M). The narrowest measure is the sum of currency in circulation and the amount of transactions deposits (TD) in the banking system. Money Multiplier Most nations require that a fraction of transactions deposits be held as reserves. The required fraction is determined by the reserve requirement (rr). This fraction determines the maximum change in the money stock that can result from a change in total reserves. Money Multiplier Under the assumption that the monetary base is comprised of transactions deposits only, the multiplier is determined by the reserve requirement only. In this case, the money multiplier (m) is equal to 1 divided by the reserve requirement, m = 1/rr. Relating the Monetary Base and the Money Stock Under the assumptions above, we can write the money stock as the monetary base times the money multiplier. M = m?MB = m(DC + FER) = m(C + TR). Focusing only on the asset measure of the monetary base, the change in the money stock is expressed as ?M = m(?DC + ?FER). Foreign Exchange Interventions Leaning with the Wind: Central bank interventions to support of speed along the current trend in the market exchange value of its nation’s currency. Leaning against the Wind: Central bank interventions to halt or reverse the current trend in the market exchange value of its nation’s currency. Example - BOJ Intervention Suppose the Bank of Japan (BOJ) intervenes to slow or halt an appreciation of the yen relative to the dollar by buying $1 million of US dollar reserves from a foreign