Please consider a banking system consisting of a central bank and three commercial banks (Bank A, B and C). The balance sheets of the three commercial banks are presented below. Currency in circulation amounts to 500. Besides loans to the banking sector, the central bank only holds securities as assets. Вank A Assets Liabilities Deposits Borrowings from the central bank Reserves 25 200 Securities 60 85 Loans 200 Вank B Assets Liabilities Deposits Borrowings from the central bank Reserves 50 400 Securities 300 200 Loans Borrowings from Bank A 50 500 Вank C Assets Liabilities 20 Deposits 130 | Borrowings from the central bank 350 Borrowings from Bank A and B Reserves 160 Securities 150 Loans 100 a) Present the balance sheets of the banking system as a whole and the balance sheet of the central bank. b) Next, determine the size of the monetary base and the size of the money supply (M1).
Please consider a banking system consisting of a central bank and three commercial banks (Bank A, B and C). The balance sheets of the three commercial banks are presented below. Currency in circulation amounts to 500. Besides loans to the banking sector, the central bank only holds securities as assets. Вank A Assets Liabilities Deposits Borrowings from the central bank Reserves 25 200 Securities 60 85 Loans 200 Вank B Assets Liabilities Deposits Borrowings from the central bank Reserves 50 400 Securities 300 200 Loans Borrowings from Bank A 50 500 Вank C Assets Liabilities 20 Deposits 130 | Borrowings from the central bank 350 Borrowings from Bank A and B Reserves 160 Securities 150 Loans 100 a) Present the balance sheets of the banking system as a whole and the balance sheet of the central bank. b) Next, determine the size of the monetary base and the size of the money supply (M1).
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:Please consider a banking system consisting of a central bank and three commercial banks (Bank A, B
and C). The balance sheets of the three commercial banks are presented below. Currency in
circulation amounts to 500. Besides loans to the banking sector, the central bank only holds securities
as assets.
Вank A
Assets
Liabilities
Reserves
Securities
Deposits
Borrowings from the central bank
25
200
60
85
Loans
200
Вank B
Assets
Liabilities
Deposits
Borrowings from the central bank
Reserves
50
400
Securities
300
200
Loans
Borrowings from Bank A
50
500
Вank C
Assets
Liabilities
Reserves
20
Deposits
Borrowings from the central bank
Borrowings from Bank A and B
160
Securities
130
150
Loans
350
100
a) Present the balance sheets of the banking system as a whole and the balance sheet of the
central bank.
b) Next, determine the size of the monetary base and the size of the money supply (M1).
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