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55 Cards in this Set
- Front
- Back
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The price of one country's currency expressed in another country's
currency. In other words, the rate at which one currency can be exchanged for another. For example, the higher the ----------- for one euro in terms of one yen, the lower the relative value of the yen. In most financial papers, currencies are expressed in terms of U.S. dollars, while the dollar is commonly compared to the Japanese yen, the British pound and the euro. As of the beginning of 2006, the ------------- of one U.S. dollar for one euro was about 0.84, which means that one dollar can be exchanged for 0.84 euros. |
Exchange Rate
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Money available to the U.S. Treasury Department primarily used for
participating in the foreign-exchange market in an attempt to maintain currency stability. It holds U.S. dollars, foreign currencies and special drawing rights. The ESF allows the U.S. government to intervene in the forex market to influence -------------, usually the domain of the central bank, without affecting the domestic money supply. This money is also used to provide financing to foreign countries. |
Exchange Stabilization Fund (ESF)
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A foreign exchange term for a thinly traded currency. -------------
are illiquid, lack market depth and trade at low volumes. Trading an -------------- can be expensive, as the bid-ask spread is usually large. Exotics are not considered major currencies because they are not easily traded in a standard brokerage account. Major currencies include the U.S. dollar, Euro, Canadian dollar and Swiss franc. Examples of ------------ include the Thai baht, Uruguay peso or Iraqi dinari. |
Exotic Currency
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An outcome in a transaction where one of the counterparties in the
transaction fails to meet their respective obligations. When --------occurs, either the party with the long position does not have enough money to pay for the transaction, or the party in the short position does not own the underlying assets that are to be delivered. ------------ can occur in both equity and derivatives markets. Whenever a trade is made, both parties in the transaction will have to transfer the cash and assets before the settlement date. Subsequently, if the transaction is not settled, one side of the transaction has failed to deliver. ------------ also can occur if there is a technical problem in the settlement process carried out by the respective clearing house. For forward contracts, a party with the short position's failure to deliver can cause significant problems for the party with the long position, because these contracts often involve significant volumes of commodities that are pertinent to long positi |
Failure To Deliver
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Nickname given to the finance ministers from various countries who
meet at global trade summits. Finance ministers are appointed and, depending on the country, the position can be given to an elected representative or to a non-elected official. The role played by a finance minister and the power he or she holds will vary among countries, but "---------" are generally responsible for shaping or advising on the budget of a country and helping with other economic policies. This term is most often seen in the financial press, in reference to meetings between the financial ministers of various countries, especially the eurozone meetings. For example, you might see the headline, "G7 finmins meet in Canada to discuss debt repayments from third world". |
Finmins
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A country's exchange rate regime under which the
government or central bank ties the official exchange rate to another country's currency (or the price of gold). The purpose of a ------------------system is to maintain a country's currency value within a very narrow band. Also known as pegged exchange rate. ------------ provide greater certainty for exporters and importers. This also helps the government maintain low inflation, which in the long run should keep interest rates down and stimulate increased trade and investment. |
Fixed Exchange Rate
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An arrangement between two parties (known as counterparties) in
which both parties pay a fixed interest rate that they could not otherwise obtain outside of a swap arrangement. To understand how investors benefit from these types of arrangements, consider a situation in which each party has a comparative advantage to take out a loan at a certain rate and currency. For example, an American firm can take out a loan in the United States at a 7% interest rate, but requires a loan in yen to finance an expansion project in Japan, where the interest rate is 10%. At the same time, a Japanese firm wishes to finance an expansion project in the U.S., but the interest rate is 12%, compared to the 9% interest rate in Japan. Each party can benefit from the other's interest rate through a ----------- currency swap. In this case, the U.S. firm can borrow U.S. dollars for 7%, then lend the funds to the Japanese firm at 7%. The Japanese firm can borrow Japanese yen at 9%, and then lend the funds to the U.S. |
Fixed-For-Fixed Swaps
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An advantageous arrangement between two parties (counterparties), in
which one party pays a fixed rate, while the other pays a floating rate. To understand how each party would benefit from this type of arrangement, consider a situation where each party has a comparative advantage to take out a loan at a certain rate and currency. For example, Company A can take out a loan with a one-year term in the U.S. for a fixed rate of 8% and a floating rate of Libor + 1% (which is comparatively cheaper, but they would prefer a fixed rate). On the other hand, Company B can obtain a loan on a one-year term for a fixed rate of 6%, or a floating rate of Libor +3%, consequently, they'd prefer a floating rate. Through an interest rate swap, each party can swap its interest rate with the other to obtain its preferred interest rate Note that swap transactions are often facilitated by a swap dealer, who will act as the required counterparty for a fee. |
Fixed-For-Floating Swap
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In forex, the condition of being neither long nor short in a particular
currency. Also referred to as 'being square'. If you had no positions in the U.S. dollar or your long and short positions canceled each other out, you would be ----- or have a ----- book. |
Flat
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A strategy of closing out of a position and taking profits if the security in
question moves up to a target level but fails to break through it. This can be seen as a method of extracting what profit a trade has been able to produce so far because the trader believes that further movement past the target level is unlikely. For example, suppose that a trader is in a long position on a given currency pair and the exchange rate moves upward in her favor by a moderate amount but fails to move past a key resistance level she was expecting to act as a catalyst for further movement. In this case, the trader would probably deem the trade -------------and close the position out for whatever profit had been earned. |
Flat On A Failure
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A point when traders shift from having more long positions to having
more short positions. This can be a very effective tool for determining the trend of a certain currency. A shift from long to short positions indicates that the market's bullish outlook on a specific currency could be coming to an end. |
Flip
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A country's exchange rate regime where its currency is set by the
foreign-exchange market through supply and demand for that particular currency relative to other currencies. Thus, ------------- change freely and are determined by trading in the forex market. This is in contrast to a "fixed exchange rate" regime. In some instances, if a currency value moves in any one direction at a rapid and sustained rate, central banks intervene by buying and selling its own currency reserves (i.e. Federal Reserve in the U.S.) in the foreign-exchange market in order to stabilize the local currency. However, central banks are reluctant to intervene, unless absolutely necessary, in a floating regime. |
Floating Exchange Rate
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The gain or loss on foreign investments due to changes in the relative
value of assets denominated in a currency other than the principal currency with which a company normally conducts business. A rising domestic currency means foreign investments will result in lower returns when converted back to the domestic currency. The opposite is true for a declining domestic currency. Foreign investments are complicated by currency fluctuation and conversion between countries. A high quality investment in another country may prove worthless because of a weak currency. Foreigndenominated debt used to purchase domestic assets has led to bankruptcy in several cases due to a fast decline in a domestic currency or a rapid rise in the currency of the foreigndenominated debt. |
Foreign Currency Effects
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An association of banks specializing in the foreign exchange activities
in India. The --------------------------, which was created in 1958, regulates the governing rules and determines the commissions and charges associated with the interbank foreign exchange business. FEDIA determines many of the rules that overlook the day-to-day forex transactions in India. In addition to rule setting, FEDIA assists member banks by acting as an advisor and assists with the training of personnel. The association is responsible for accrediting India's foreign exchange brokers and announcing the exchange rates to its member banks. |
Foreign Exchange Dealers Association Of India (FEDAI)
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A term coined by economist Ed Yardeni relating international liquidity to
the effect of foreign central banks on U.S. monetary policy. It is measured as the sum of U.S. Treasury and U.S. agency securities held by foreign banks. FRODOR is an extremely procyclical economic indicator. As the growth of FRODOR rises, so do the prices of stocks, commodities and real estate, while the U.S. dollar declines. The opposite is seen when the growth of FRODOR decelerates. |
Foreign Official Dollar Reserves (FRODOR)
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1. The risk of an investment's value changing due to changes in
currency exchange rates. 2. The risk that an investor will have to close out a long or short position in a foreign currency at a loss due to an adverse movement in exchange rates. Also known as "currency risk" or "exchange-rate risk". This risk usually affects businesses that export and/or import, but it can also affect investors making international investments. For example, if money must be converted to another currency to make a certain investment, then any changes in the currency exchange rate will cause that investment's value to either decrease or increase when the investment is sold and converted back into the original currency. |
Foreign-Exchange Risk
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The market in which currencies are traded. The -----------market is the
largest, most liquid market in the world with an average traded value that exceeds $1.9 trillion per day and includes all of the currencies in the world. There is no central marketplace for currency exchange; trade is conducted over the counter. The -------- market is open 24 hours a day, five days a week, and currencies are traded worldwide among the major financial centers of London, New York, Tokyo, Zürich, Frankfurt, Hong Kong, Singapore, Paris and Sydney. The forex is the largest market in the world in terms of the total cash value traded, and any person, firm or country may participate in this market. |
Forex (FX)
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An exchange-traded contract to buy or sell a specified amount of a
given currency at a predetermined price on a set date in the future. --------- are written with a specific termination date, at which point delivery of the currency must occur unless an offsetting trade is made on the initial position. ---------- serve two primary purposes as financial instruments. First, they can be used by companies or sole proprietors to remove the exchange-rate risk inherent in cross-border transactions. Second, they can be used by investors to speculate and profit from currency exchange-rate fluctuations. |
Forex Futures
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In a foreign exchange situation where the domestic current spot
exchange rate is trading at a higher level then the current domestic futures spot rate for a maturity period. A -------------- is an indication by the market that the current domestic exchange rate is going to depreciate in value against another currency. A ------------- means the market expects the domestic currency to depreciate against another currency, but that is not to say that will happen. Although the forward expectation's theory of exchange rates states this is the case, the theory does not always hold. |
Forward Discount
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The number of basis points added to or subtracted from the current
spot rate to determine the forward rate. When points are added to the spot rate, there is a ---------------- premium; when points are subtracted from the spot rate, there is a points discount. The number of forward points on a given exchange rate will be determined by the prevailing interest rates in each market, the time period between the spot and forward rate, and other market factors. For example, if the current spot rate of the USD/EUR is 0.7232 and the two-year forward rate is 0.7332, the number of forward points is 100 basis points (0.7332-0.7232). |
Forward Points
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When dealing with foreign exchange (FX), a situation where the spot
futures exchange rate, with respect to the domestic currency, is trading at a higher spot exchange rate then it is currently. A ----------- is frequently measured as the difference between the current spot rate and the forward rate, but any expected future exchange rate will suffice. It is a reasonable assumption to make that the future spot rate will be equal to the current futures rate. According to the forward expectation's theory of exchange rates, the current spot futures rate will be the future spot rate. This theory is routed in empirical studies and is a reasonable assumption to make in the long term. |
Forward Premium
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An over-the-counter contract between parties that determines the rate
of interest, or the currency exchange rate, to be paid or received on an obligation beginning at a future start date. The contract will determine the rates to be used along with the termination date and notional value. On this type of agreement, it is only the differential that is paid on the notional amount of the contract. Also known as a "-------------". Typically, for agreements dealing with interest rates, the parties to the contract will exchange a fixed rate for a variable one. The party paying the fixed rate is usually referred to as the borrower, while the party receiving the fixed rate is referred to as the lender. For a basic example, assume Company A enters into an FRA with Company B in which Company A will receive a fixed rate of 5% for one year on a principal of $1 million in three years. In return, Company B will receive the one-year LIBOR rate, determined in three years' time, on the principal amount. |
Forward Rate Agreement (FRA)
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In the currency market, this is the abbreviation for the British pound.
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GBP
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A term used by British labor ministers during the 1964 Sterling Crisis to
refer to Swiss banks. British labor ministers were convinced that the foreign exchange speculation activities of Swiss banks were causing the devaluation of the Sterling. Just like the gnomes of legends, who dwell underground counting their riches, Swiss bankers were known for their extremely secretive policies. |
Gnomes of Zurich
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A monetary system in which a country's government allows its currency
unit to be freely converted into fixed amounts of gold and vice versa. The exchange rate under the ----------- monetary system is determined by the economic difference for an ounce of gold between two currencies. The ------------ was mainly used from 1875 to 1914 and also during the interwar years. The use of the -----------would mark the first use of formalized exchange rates in history. However, the system was flawed because countries needed to hold large gold reserves in order to keep up with the volatile nature of supply and demand for currency. After World War II, a modified version of the --------- monetary system, the Bretton Woods monetary system, was created as its successor. This successor system was initially successful, but because it also depended heavily on gold reserves, it was abandoned in 1971 when U.S president Nixon "closed the gold window". |
Gold Standard
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A trend indicated by a large candlestick followed by a doji that is
located within the top and bottom of the candlestick's body. This indicates that the previous trend is about to reverse. A ----------- can be either bullish or bearish, depending on the previous trend. The appearance of a -----------, rather than a smaller body, increases the likelihood that the trend will reverse. |
Harami Cross
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A currency, usually from a highly industrialized country, that is widely
accepted around the world as a form of payment for goods and services. A ----------- is expected to remain relatively stable through a short period of time, and to be highly liquid in the forex market. Another criterion for ------------- is that the currency comes from a politically and economically stable country. The U.S. dollar and the British pound are good examples of hard currencies. |
Hard Currency
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Describes gold/silver/platinum (bullion) coins. A government that uses
a ---------- policy backs the value of the currency it uses with a hard, tangible and lasting material that will retain its relative value over time. For example, in the early 1900s, the U.S. dollar was backed by the value of gold. Today, most countries use fiat money, which is made legal tender by government decree but has no intrinsic value of its own. |
Hard Money
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A common acronym for the -----------------, which is the currency of
Hong Kong. It is pegged to the U.S. dollar through the use of a linked exchange rate system, where US$1 is kept in a range of ---$7.75- $7.85. Three Chinese note-issuing banks are authorized to issue --------, subject to conditions laid out by the Hong Kong government. Banknotes then run through a government exchange fund which holds the U.S. dollars in reserves and records all transactions in the general accounts of the two currencies. To ensure they can always keep this parity with the U.S. dollar, the Hong Kong Monetary Authority (HKMA) has to keep huge foreign exchange reserves, in amounts totalling several times the actual amount of money in circulation. The HKMA also uses other open market operations and a robust international banking system to keep the supply of -------------- under tight restraints. |
HKD
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A situation where one currency cannot be exchanged for another
currency because of foreign exchange regulations or physical barriers. ---------------- may be restricted from trade due to extremely high volatility or political sanctions. Labeling a currency as inconvertible allows regulators to protect investors from storing funds in an unsafe investment. For example, if a nation were to begin experiencing hyperinflation, where the value of a unit of currency rapidly depreciates, its currency could be deemed inconvertible. This would prevent investors from converting funds into the unstable currency. |
Inconvertible Currency
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In forex trading, a currency quote that is provided by a market maker to
a trading party but that is not firm. In other words, when a market maker provides an ----------- to a trader, the market maker is not obligated to trade the given currency pair at the price or the quantity stated in the quote. Contrast this to a firm quote, in which a market maker guarantees a specified bid or ask price to a trader up to the maximum quantity specified in the quote. Market makers will typically provide indicative quotes if a trader requests a quote for a currency pair but does not specify the quantity to be traded, or if there is some doubt as to the market maker's ability to transact the currency pair at the bid or ask quoted. The bottom line is that traders can rely on -------------- as a reasonable estimate of the exchange rate at which they can enter their currency trade, but there is no guarantee that this will be the rate they get. |
Indicative Quote
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A foreign exchange rate quoted as the foreign currency per unit of the
domestic currency. In an ------------, the foreign currency is a variable amount and the domestic currency is fixed at one unit. For example, in the U.S., an ------------ for the Canadian dollar would be C$1.17 = US$1. Conversely, in Canada an ------- for U.S. dollars would be US$0.85 = C$1.ill reverse. |
Indirect Quote
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A measurement of the number of jobless claims filed by individuals
seeking to receive state jobless benefits. This number is watched closely by financial analysts because it provides insight into the direction of the economy. Higher --------- positively correlate with a weakening economy, and vice versa for lower ------------. The strength of a nation's economy will have an impact on the appreciation or depreciation of its currency against other major currencies. Therefore, forex traders typically look at the ---------------- figure as part of their analysis when assessing a currency's prospects for the immediate future. Generally speaking, week-by-week numbers are too volatile to get an accurate picture of economic changes, so four-week moving averages are typically used for the initial claims metric. |
Initial Claims
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The financial system and trading of currencies among banks and
financial institutions, excluding retail investors and smaller trading parties. While some interbank trading is performed by banks on behalf of large customers, most interbank trading takes place from the banks' own accounts. The ------------ for forex serves commercial turnover of currency investments as well as a large amount of speculative, short-term currency trading. According to data compiled in 2004 by the Bank for International Settlements, approximately 50% of all forex transactions are strictly interbank trades.There is a wide range of published interbank rates, including the LIBOR, which is set daily based on the average rates on loans made within the London interbank market. |
Interbank Market
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A differential measuring the gap in interest rates between two similar
interest-bearing assets. Traders in the foreign exchange market use ----------------when pricing forward exchange rates. Based on the interest rate parity, a trader can create an expectation of the future exchange rate between two currencies and set the premium (or discount) on the current market exchange rate futures contracts. The ------------------ is a key component of the carry trade. For example, say an investor borrows US$1,000 and converts the funds into British pounds, allowing the investor to purchase a British bond. If the purchased bond yields 7% while the equivalent U.S. bond yields 3%, then the interest rate differential equals 4% (7% - 3%). The ---------------is the amount the investor can expect to profit using a carry trade. This profit is ensured only if the exchange rate between dollars and pounds remains constant. |
Interest Rate Differential (IRD)
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A theory that the interest rate differential between two countries is
equal to the differential between the forward exchange rate and the spot exchange rate. ----------- plays an essential role in foreign exchange markets, connecting interest rates, spot exchange rates and foreign exchange rates. The relationship can be seen when you follow the two methods an investor may take to convert foreign currency into U.S. dollars. Option A would be to invest the foreign currency locally at the foreign risk-free rate for a specific time period. The investor would then simultaneously enter into a forward rate agreement to convert the proceeds from the investment into U.S. dollars, using a forward exchange rate, at the end of the investing period. Option B would be to convert the foreign currency to U.S. dollars at the spot exchange rate, then invest the dollars for the same amount of time as in option A, at the local (U.S.) risk-free rate. When no arbitrage opportunities exist, the cash flows from both o |
Interest Rate Parity
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An economic theory that states that an expected change in the current
exchange rate between any two currencies is approximately equivalent to the difference between the two countries' nominal interest rates for that time. Calculated as: Where: "E" represents the % change in the exchange rate "i1" represents country A's interest rate "i2" represents country B's interest rate For example, if country A's interest rate is 10% and country B's interest rate is 5%, country B's currency should appreciate roughly 5% compared to country A's currency. The rational for the --- is that a country with a higher interest rate will also tend to have a higher inflation rate. This increased amount of inflation should cause the currency in the country with the high interest rate to depreciate against a country with lower interest rates. |
International Fisher Effect (IFE)
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An agreement set forth by the --------------------that
reflects the best practices for transactions in the foreign exchange market. IFEMA was published in 1997 and sponsored by the British Bankers Association, Canadian Foreign Exchange Committee and the Tokyo Foreign Exchange Market Practices Committee. IFEMA is a standardized agreement between two parties for the exchange of currency. The agreement covers all facets of the transaction, providing detailed practices on the creation and settlement for a forex contract. In addition to the terms of a contract, IFEMA explains the consequences of default, force majeure or other unforeseen circumstances. |
International Foreign Exchange Master Agreement (IFEMA)
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An international organization created for the purpose of:
1. Promoting global monetary and exchange stability. 2. Facilitating the expansion and balanced growth of international trade. 3. Assisting in the establishment of a multilateral system of payments for current transactions. The IMF plays three major roles in the global monetary system. The Fund surveys and monitors economic and financial developments, lends funds to countries with balance-of-payment difficulties, and provides technical assistance and training for countries requesting it. |
International Monetary Fund (IMF)
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A form of arbitrage involving rearranging a bank's cash by borrowing
from the interbank market, and re-depositing the borrowed money locally at a higher interest rate. The bank will make money on the spread between the interest rate on the local currency, and the interest rate on the borrowed currency. ---------- works because it allows the bank to borrow at a cheaper rate than it could in the local currency market. For example, assume an American bank goes to the Interbank market to borrow at the lower eurodollar rate, and then deposits those eurodollars at a bank within the US. The larger the spread, the more money that can be made. |
Inward Arbitrage
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The internationally standardized three-letter abbreviation for a country's
currency. For example, the ---------------- for the United States Dollar would be USD. |
ISO Currency Code
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A slang term for the New Zealand dollar (NZD). It derives its name from
New Zealand's national icon - a flightless bird called a ------- - which is pictured on one side of the country's $1 coin. This is a popular term in currency trading because New Zealand's currency exchange rate is closely tied to the price/demand of the country's abundant agricultural and forestry products. It is not uncommon to hear a news report say the ---- is up, or down, in the day's trading. |
Kiwi
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The theory that the price of a given security, commodity or asset will
have the same price when exchange rates are taken into consideration. The ----------- is another way of stating the concept of purchasing power parity.The ------------- exists due to arbitrage opportunities. If the price of a security, commodity or asset is different in two different markets, then an arbitrageur will purchase the asset in the cheaper market and sell it where prices are higher. When the purchasing power parity doesn't hold, arbitrage profits will persist until the price converges across markets. |
Law Of One Price
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Any form of currency issued by the United States Treasury and not the
Federal Reserve System, including gold and silver coins, Treasury notes and Treasury bonds. ------------ stands in contrast to fiat money, to which the government assigns value although it has no intrinsic value of its own and is not backed by reserves. Fiat money includes legal tender such as paper money, checks, drafts and bank notes. Also known as "specie", which means "in actual form." | Oddly enough, the dollar bills that we carry around in our wallets are not considered ---------. The notation on the bottom of a U.S. dollar bill reads "Legal Tender for All Debts, Public and Private", and is issued by the U.S. Federal Reserve, not the U.S. Treasury. Legal tender can be exchanged for an equivalent amount of lawful money, but effects such as inflation can change the value of fiat money; ---------- is said to be the most direct form of ownership, but for purposes of practicality it has little use in direct transactions betwe |
Lawful Money
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The alteration of normal payment or receipts in a foreign exchange
transaction because of an expected change in exchange rates. An expected increase in exchange rates is likely to speed up payments, while an expected decrease in exchange rates will probably slow them down. Accelerating the transaction is known as "-----", while slowing it down is known as "----". ------ will result when firms or individuals making payments expect an increase in the foreign-exchange rate, while lags arise when the exchange rate is expected to fall. ------ and ----- are used in an attempt to improve profits. |
Leads And Lags
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A system of managing a nation's currency and exchange rate by linking
the national currency to another base currency that is held at a fixed ratio in deposit at domestic banks. Once the exchange rate is set, there is typically no interference from the government or through monetary policy decisions that will affect the exchange rate. Currency is only issued when there are reserves in the linked currency to back it up. If the exchange rate begins to shift from the fixed ratio, currency is immediately added to or taken out of circulation to bring the ratio back into balance. This is different from simply pegging one currency to another; in a --------------------------------, currency can only be issued when confirmed reserves in the linked currency are held at local banking institutions. In Hong Kong, for example, this means that every Hong Kong dollar that is floating around in the economy is backed by several U.S. dollars held in reserve. The advantage of this system is that it stabilizes the |
Linked Exchange Rate System
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In forex trading, the specific value of a trader's account below which the
liquidation of the trader's positions is automatically triggered and executed at the best available exchange rate at the time. The ---------------- is expressed as a percentage value of assets. If a forex trader's positions go against him or her, his or her account will eventually reach the ----------------, unless the trader contributes further margin to top up his or her account. Forex trading makes heavy use of leverage; therefore, the forex dealer holding an account for a trader takes on the risk that the trader's positions will lose money and that the trader will be unable to repay the borrowed funds used to make the forex trades. As such, a specified -----------------, which the trader agrees to when opening his or her account, fixes the minimum margin (expressed as a percentage) that the forex dealer will tolerate before automatically liquidating the trader's assets to avoid the possibility of default. |
Liquidation Level
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A slang term for a Canadian dollar. It is derived from the picture of a
loon on one side of the coin. Just like in the U.S. where the dollar is referred to as the "greenback", the --------- is a often used to refer to the Canadian dollar. For example one may hear in a news report that the loonie was up in today's trade. |
Loonie
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A currency trading term that describes when the banks' buying price in
the forward market is lower than the selling price in the spot market. A trader is ------------- when he or she buys at one price now and then agrees to sell for less in the future. This is the opposite of earning the points. For example, suppose that Peter buys the British pound at 2.2345 dollars per British pound in the spot and enters into a forward contract to sell the pound back at 2.2300 dollars per pound in the future. Peter is losing the points, in this case the 0.0045 dollars per pound. |
Losing The Points
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Terms used by floor traders to signify buying and selling. Mainly
used in forex transactions. If a trader wanted to buy something, he/she would type or say "----,"as in "It's mine." If the trader wanted to sell, he/she would type or say "------," as in "It's yours." |
Mine and Yours
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A forward contract with a provision guaranteeing a minimum price at
delivery of the underlying agricultural commodity. --------------------------- provide certainty for some investors wishing to hedge their positions. As a bare minimum, price is fixed at delivery. |
Minimum Price Contract
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The total amount of a currency that is either circulated in the hands of
the public or in the commercial bank deposits held in the central bank's reserves. This measure of the money supply typically only includes the most liquid currencies. Also known as the "money base". For example, suppose country Z has 600 million currency units circulating in the public and its central bank has 10 billion currency units in reserve as part of deposits from many commercial banks. In this case, the monetary base for country Z is 10.6 billion currency units. For many countries, the government can maintain a measure of control over the ------------ by buying and selling government bonds in the open market. |
Monetary Bases
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The actions of a central bank, currency board or other regulatory
committee that determine the size and rate of growth of the money supply, which in turn affects interest rates. In the United States, the Federal Reserve is in charge of ------------. |
Monetary Policy
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A nation's assets in foreign currency and/or commodities like gold and
silver, which are used to back up the national currency. ------------- also provide a cushion for executing central banking functions like adding to the money supply and settling foreign exchange contracts in local currencies. When the United States was using the Bretton Woods inspired monetary system, only gold was used as a ----------------, a structural problem that most saw as a roadblock to future economic growth. The U.S. dollar is now a fiat currency (not pegged to gold reserves), and even though the Federal Reserve Banks keep a large amount of reserves, most of what is held today is used for settling short-term currency contracts and for liquidity activities for the domestic economy. |
Monetary Reserve
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The entire quantity of bills, coins, loans, credit and other liquid
instruments in a country's economy. ---------- is divided into multiple categories - M0, M1, M2 and M3 - according to the type and size of account in which the instrument is kept. The ----------- is important to economists trying to understand how policies will affect interest rates and growth. |
Money Supply
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