Bank of Canada Week 8

The bank of canada the branch banking system lead for

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Unformatted text preview: public, currency notes are issued. Money Supply •  Money supply is the total amount of money available in the economy. •  Money supply data is recorded at the central bank. •  This can be modified by purchasing financial assets or lending money to financial insItuIons. •  Commercial banks then increase this through fracIonal reserve banking. FracIonal Reserve Banking •  Banks maintain a porIon (fracIon) of their total customer’s deposits at the central bank in the form of a reserve. •  The central bank requires that banks keep a minimum amount in reserve, to cover the normal demand for withdrawals. •  The central bank oversees the acIviIes of the commercial banks, provides deposit insurance to consumers and acts as a lender of last reso...
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