Bank Reserves – Long-term Interest Rates – Flashcards

Currency held by banks in their vaults plus their deposits at the Federal Reserve

A simple tool that summarizes a business's financial position by showing, in a single table, the business's assets and liabilities, with assets on the left and liabilities on the right

the fraction of bank deposits that a bank holds as reserves.

The smallest fraction of deposits that the Federal Reserve allows banks to hold

A phenomenon in which many of a bank's depositors try to withdraw their funds due to fears of a bank failure

A guarantee that a bank's depositors will be paid even if the bank cant come up with the funds, up to a maximum amount per account

Rules set by the Federal Reserve that set the minimum reserve ratio for banks.

An arrangement in which the Federal Reserve stands ready to lend money to banks

A bank's reserves over and above the reserves required by law or regulation

The sum of currency in circulation and bank reserves

The ratio of the money supply to the monetary base

An institution that oversees and regulates the banking system and control the monetary base

A bank that accepts deposits and is covered by deposit insurance

A bank that trades in financial assets and is not covered by deposit insurance

Deposit-taking banks, usually specialized in issuing home loans

The degree to which a financial institution is financing its investments with borrowed funds

The reduction in a firm's net worth from falling asset prices

Describes the sequence of events that takes place when a firm's asset sales to cover losses produce negative balance sheet effects on other firms and force creditors to call in their loans, forcing sales of more assets and causing further declines in asset prices

Lending to home buyers who don't meet the usual criteria for borrowing

The pooling of loans and mortgages made by a financial institution and the sale of shares in such a pool to other investors.

The financial market that allows banks that fall short of reserve requirements to borrow funds from banks with excess reserves

The interest rate at which funds are borrowed and lent in the federal funds market

The interest rate the Fed charges on loans to banks

A purchase or sale of U.S. Treasury bills by the Federal Reserve, undertaken to change the monetary base, which changes the money supply

The interest rate on financial assets that mature within less than a year

The interest rate on financial assets that mature a number of years into the future