The Economics of Money, Banking, and Financial Markets

A set of vocabulary flashcards covering key concepts related to the economics of money, banking, and financial markets from the lecture notes.

Monetary Base (MB)

The total amount of a currency in circulation plus reserves held by banks.

Money Supply (M)

The total amount of money available in an economy at a specific time, defined as M = C + D.

Reserves (R)

Funds that banks hold to meet depositor demands and manage liquidity, which are not to be confused with chequable deposits.

Vault Cash

Physical currency held in bank vaults, cash tills, and ATMs.

Settlement Balances

Interest-bearing deposits that banks hold at the central bank, primarily the Bank of Canada (BoC).

Required Reserves

The minimum amount of reserves that a bank is required to hold, though not mandated in Canada.

Desired Reserves

Reserves that banks choose to hold, which may exceed the required reserves; often calculated as a percentage of deposits.

Excess Reserves

Any reserves held by a bank beyond what is deemed necessary, as in a situation where a bank holds more than its desired reserve ratio.

Chequable Deposits (D)

Deposits at banks that clients can withdraw and transfer by writing checks.