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- https://socialsci.libretexts.org/Workbench/Introduction_to_Macroeconomics/07%3A_Money_Creation/7.01%3A_The_Role_of_BanksBut if a bank sells its local loans, and then buys a mortgage-backed security based on home loans in many parts of the country, it can avoid being exposed to local financial risks. (In the simple exam...But if a bank sells its local loans, and then buys a mortgage-backed security based on home loans in many parts of the country, it can avoid being exposed to local financial risks. (In the simple example in the text, banks just own “bonds.” In reality, banks can own a number of financial instruments, as long as these financial investments are safe enough to satisfy the government bank regulators.) From the standpoint of a local homebuyer, securitization offers the benefit that a local bank does…
- https://socialsci.libretexts.org/Courses/HACC_Central_Pennsylvania's_Community_College/ECON_201%3A_Principles_of_Macroeconomics_(Balic)/09%3A_Money_and_Banking/9.03%3A_The_Role_of_BanksA bank allows people and businesses to store this money in either a checking account or savings account, for example, and then withdraw this money as needed through the use of a direct withdrawal, wri...A bank allows people and businesses to store this money in either a checking account or savings account, for example, and then withdraw this money as needed through the use of a direct withdrawal, writing a check, or using a debit card. Of course, when banks make loans to firms, the banks will try to funnel financial capital to healthy businesses that have good prospects for repaying the loans, not to firms that are suffering losses and may be unable to repay.
- https://socialsci.libretexts.org/Bookshelves/Economics/Economics_(Boundless)/27%3A_The_Monetary_System/27.3%3A_Creating_MoneyA fractional reserve system is one in which banks hold reserves whose value is less than the sum of claims outstanding on those reserves.
- https://socialsci.libretexts.org/Bookshelves/Economics/Economics_(Boundless)/28%3A_Monetary_Policy/28.2%3A_Monetary_Policy_ToolsThe reserve ratio is the percentage of deposits that a bank is required to hold in reserves, or funds that are not allowed to be loaned.
- https://socialsci.libretexts.org/Bookshelves/Economics/Principles_of_Macroeconomics_3e_(OpenStax)/14%3A_Money_and_Banking/14.04%3A_The_Role_of_BanksHowever, if a bank sells its local loans, and then buys a mortgage-backed security based on home loans in many parts of the country, it can avoid exposure to local financial risks. (In the simple exam...However, if a bank sells its local loans, and then buys a mortgage-backed security based on home loans in many parts of the country, it can avoid exposure to local financial risks. (In the simple example in the text, banks just own “bonds.” In reality, banks can own a number of financial instruments, as long as these financial investments are safe enough to satisfy the government bank regulators.) From the standpoint of a local homebuyer, securitization offers the benefit that a local bank does…
- https://socialsci.libretexts.org/Bookshelves/Economics/Economics_(Boundless)/27%3A_The_Monetary_System/27.2%3A_Introducing_the_Federal_ReserveMonetary policy is the process by which a monetary authority controls the money supply, often to produce stable prices and low unemployment.
