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15 Cards in this Set
- Front
- Back
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call loans
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usually a loan that either the borrower or lender can terminate upon request
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lender of last resort
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the role of the Fed as a lender to banks in difficulty to prevent the banks from failing, due to a lack of liquidity
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elastic money supply
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a flexible supply of currency that can accommodate changing public demand for cash
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federal open market committee (FOMC)
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a committee that consists of seven member of the Board of Governors of the federal reserve System plus five presidents of Federal Reserve banks that determines the nation's monetary policy and financial institutions' reserve balances
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regulation q
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a historical Federal Reserve regulation that set a maximum interest rate that banks could pay on deposits. All interest rate ceilings on time and savings were phased out on April 1, 1986, by Federal Law
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margin requirements
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the amount of money people can borrow so they can buy stocks; this amount is restricted by Federal Reserve Regulations G,T, U, and X in order to prevent excessive speculation in the stock market
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monetary base
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currency in circulation plus financial institution reserve deposits at the Federal Reserve. The monetary base consist of all asset that can be used to satisfy legal reserve requirements. Thus, if it grows, financial institutions reserves (and financial institution deposits) usually grow as well
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total reserves
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the reserve amount computed by a bank by summing its holdings of vault cash with its holdings of reserve deposits at Federal Reserve banks over a 2-week reserve maintenance period
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required reserves
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Financial institution are required by law to maintain minimum reserves equal to percentage of specified deposit liabilitie. Reserve requirements vary with the deposit size of the institution and the type of deposit. They are held at Federal Reserve banks or as cash in financial institutions' vaults.
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excess reserves
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the amount arrived at when required reserves are subtracted from a bank's actual reserves
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deferred availability cash items (DACI)
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Federal Reserve balance-sheet item representing the value of checks deposited at the Fed by depository institutions that have not yet been credited to the institution's amounts
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discount rate
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the interest rate a financial institution must pay to borrow reserve deposits from its regional Federal Reserve bank
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discount window
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an operation of the Federal Reserve System whereby banks may borrow tempo0rary reserves from the Federal Reserve System as a an alternative to selling secondary reserves or borrowing federal funds to cover legal reserve deficiencies; the discount window is part of the mechanism for adjusting short-term required reserve deficiencies; the discount window is part of the mechanism for adjusting short- term required reserve deficiencies
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open market operations
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the purchase or sale of government securities by the Federal reserve. Open market operations are used to increase or decrease bank reserves and the monetary base. When the Fed purchases securities, the monetary base expands
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cash items in process of collection (CIPC)
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an account that is the value of checks drawn on other banks but not yet collected
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