【正文】 f making payments in the money market. ? 2020 by The McGrawHill Companies, Inc. All rights reserved. McGraw Hill / Irwin 11 66 Federal Funds ? The term federal funds came about because early in the development of the market, the principal source of immediatelyavailable money was the reserve balance that each Federal Reserve System member bank had to keep at the Federal Reserve bank in its region. ? Today, the federal funds market is broader in scope – some deposits with mercial banks are also available for immediate transfer. ? 2020 by The McGrawHill Companies, Inc. All rights reserved. McGraw Hill / Irwin 11 67 Federal Funds ? Banks and other depository institutions must hold in a special reserve account liquid assets equal to a fraction of the funds deposited with them by the public. ? The required legal reserves may be either vault cash or reserve balances with the regional Federal Reserve banks. ? Since the reserves earn little or no ine, most bankers try to lend out excess reserves. ? 2020 by The McGrawHill Companies, Inc. All rights reserved. McGraw Hill / Irwin 11 68 The Structure of the Federal Funds Market Banks amp。Money and Capital Markets 11 C h a p t e r Eighth Edition Financial Institutions and Instruments in a Global Marketplace Peter S. Rose McGraw Hill / Irwin Slides by YeeTien (Ted) Fu Money Market Instruments: Treasury Bills, Repurchase Agreements, Federal Funds, and Bank CDs ? 2020 by The McGrawHill Companies, Inc. All rights reserved. McGraw Hill / Irwin 11 2 Money and Capital Markets 12 C h a p t e r Eighth Edition Financial Institutions and Instruments in a Global Marketplace Peter S. Rose Slide by YeeTien (Ted) FuMoney Market Instruments: Commercial Paper, Federal Agency Securities, Bankers’ Acceptances, and Eurocurrency Deposits ? 2020 by The McGrawHill Companies, Inc. All rights reserved. McGraw Hill / Irwin 11 3 ? Learning Objectives ? ? To discover the important roles that large corporations, government agencies and banks play in the money market. ? To explore the nature and characteristics of mercial paper. ? To learn how federal agencies aid various economic sectors in finding lowcost credit. ? 2020 by The McGrawHill Companies, Inc. All rights reserved. McGraw Hill / Irwin 11 4 ? Learning Objectives ? ? To see the trend toward the internationalization of the money market, and examine how bankers’ acceptances and Eurodeposits are employed in aiding both domestic and international trade. ? To understand how the transfers of money from one spending unit to another across international boundaries can impact a nation’s economy. ? 2020 by The McGrawHill Companies, Inc. All rights reserved. McGraw Hill / Irwin 11 5 Commercial Paper ? Commercial paper consists of shortterm, unsecured promissory notes issued by wellknown and financially strong panies. ? Commercial paper is traded mainly in the primary market. Opportunities for resale in the secondary market are more limited. ? Commercial paper is rated prime, desirable, or satisfactory, depending on the credit standing of the issuing pany. ? 2020 by The McGrawHill Companies, Inc. All rights reserved. McGraw Hill / Irwin 11 6 Types of Commercial Paper ? There are two major types of mercial paper. ? Direct paper is issued mainly by large finance panies and bank holding panies directly to the investor. ? Dealer paper, or industrial paper, is issued by security dealers on behalf of their corporate customers (mainly nonfinancial panies and smaller financial panies). ? 2020 by The McGrawHill Companies, Inc. All rights reserved. McGraw Hill / Irwin 11 7 Structure of the Commercial Paper Market Investors in mercial paper Money market funds Banks Insurance panies Pension funds Industrial panies Other investors Demand Side Supply Side Issuers of mercial paper Finance panies Bank holding panies Nonfinancial firms Direct or finance paper Paper dealer houses Dealer or industrial paper ? 2020 by The McGrawHill Companies, Inc. All rights reserved. McGraw Hill / Irwin 11 8 Maturities amp。 large depositors with excess reserves available (suppliers) Banks needing more legal reserves amp。 governmentsponsored credit agencies Borrowing funds from the open market and from other government agencies Granting loans to disadvantaged sectors Guaranteeing loans made by other lenders Buying loans from the secondary market ? 2020 by The McGrawHill Companies, Inc. All rights reserved. McGraw Hill / Irwin 11 18 Federal Agency Securities ? The agency market has soared in recent years, with the volume of outstanding securities climbing from about $2 billion during the 1950s to almost $2 trillion today. ? Agency securities are generally short to medium term in maturity (running out to about 10 years). ? 2020 by The McGrawHill Companies, Inc. All rights reserved. McGraw Hill / Irwin 11 19 The Marketing of Agency Issues ? The most active buyers of agency securities include banks, state and local governments, government trust funds, and the Federal Reserve System. ? The Federal Reserve is authorized to conduct open market operations in agency IOUs. ? Major securities dealers who handle . government securities also generally trade in agency issues. ? 2020 by The McGrawHill Companies, Inc. All rights reserved. McGraw Hill / Irwin 11 20 Bankers’ Acceptances ? A bankers’ acceptance is a time draft drawn on and endorsed by an importer’s bank. ? Acceptances are used in international trade because most exporters are uncertain of the credit standing of their importers. ? The issuing bank unconditionally guarantees to pay the face value of the acceptance when it m