Topic 13-14. Creation of money by a banking system. Basics of monetary policy implementation

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Across
  1. 3. standard tools like open market operations, reserve requirements, and the discount rate.
  2. 6. Central bank loans to banks with longer maturities (e.g., 1-3 years) to ensure liquidity.
  3. 10. the central bank’s lending facility for banks in need of short-term liquidity.
  4. 17. the minimum amount of reserves banks must hold against deposits, as set by the central bank.
  5. 18. a central bank tool where banks can deposit excess reserves, often earning interest.
  6. 20. reserves held by banks above the required minimum.
  7. 21. policies aimed at reducing systemic financial risks
  8. 22. a rapid escalation in asset prices driven by speculation, exceeding intrinsic value, often followed by a crash.
  9. 23. the interest rate at which banks lend reserves to each other overnight in the U.S.
  10. 24. a variable (e.g., money supply or interest rates) that the central bank influences to achieve broader policy goals.
  11. 25. the interest rate charged by the central bank on loans to commercial banks.
Down
  1. 1. the process by which banks create money through lending, as deposits are redeposited and relent in the economy.
  2. 2. the central bank’s role in providing emergency liquidity to financial institutions during crises.
  3. 4. the central bank sells government securities to reduce the money supply.
  4. 5. the central bank buys government securities to increase the money supply.
  5. 7. a policy where the central bank sets explicit inflation rate goals and adjusts policy to achieve them.
  6. 8. reserves borrowed by banks from the central bank.
  7. 9. the inverse of the reserve requirement ratio, showing the maximum potential increase in deposits from an initial reserve injection.
  8. 11. temporary open market operations to offset fluctuations in money supply.
  9. 12. a central bank policy of purchasing private-sector assets to improve liquidity in specific markets.
  10. 13. the monetary base minus borrowed reserves.
  11. 14. the total amount of a currency in circulation plus reserves in the banking system.
  12. 15. permanent open market operations aimed at changing the monetary base.
  13. 16. the sum of currency in circulation and reserves held by banks at the central bank.
  14. 19. the ratio of the money supply to the monetary base, indicating how much the money supply expands with each unit of base money.