【正文】 paper is then issued as a claim against that pool ? 2020 by The McGrawHill Companies, Inc. All rights reserved. McGraw Hill / Irwin 11 14 Federal Agency Securities ? Certain sectors of the economy, such as agriculture, housing, small businesses, and college students, appear to have an unusually difficult time raising funds in the money and capital markets. ? Beginning in 1916, the . federal government created special agencies to make direct loans or guarantee private loans to these “disadvantaged” borrowers. ? 2020 by The McGrawHill Companies, Inc. All rights reserved. McGraw Hill / Irwin 11 15 Types of Federal Credit Agencies ? Governmentsponsored agencies are federally chartered but privately owned. Their borrowing and lending activities are not reflected in the federal government’s budget. ? Examples: ? Federal Farm Credit Banks (FFCB) ? Federal Home Loan Mortgage Corp (Freddie Mac) ? Student Loan Marketing Association (Sallie Mae) ? Financing Assistance Corporation (FAC) ? 2020 by The McGrawHill Companies, Inc. All rights reserved. McGraw Hill / Irwin 11 16 Types of Federal Credit Agencies ? Federal agencies are legally a part of the government structure, and their borrowing and lending activities are included in the federal budget. ? Examples: ? ExportImport Bank (EXIM) ? Farmers Home Administration (FMHA) ? Government National Mortgage Association (Ginnie Mae) ? Federal Deposit Insurance Corporation (FDIC) ? 2020 by The McGrawHill Companies, Inc. All rights reserved. McGraw Hill / Irwin 11 17 The Roles of Federal Credit Agencies Performing the Roles of a Financial Intermediary Federal amp。 A cce p t a n ce sT re a s u ry Bi l l sC e rt i f i ca t e s o f D e p o s i t? 2020 by The McGrawHill Companies, Inc. All rights reserved. McGraw Hill / Irwin 11 26 Investors in Acceptances ? Investors in acceptances include banks, industrial corporations, money market mutual funds, local governments, federal agencies, and insurance panies. ? To many investors, acceptances are a close substitute for Treasury bills, negotiable CDs, or mercial paper in terms of quality, although the acceptance market is far smaller in terms of the volume of trading. ? 2020 by The McGrawHill Companies, Inc. All rights reserved. McGraw Hill / Irwin 11 27 Eurocurrency Deposits ? The Eurocurrency market has arisen because of the tremendous need worldwide for funds denominated in dollars, Euros, pounds, and other relatively stable currencies. ? The Eurocurrency market represents the largest of all money markets worldwide, with total funds probably in excess of $4 trillion. ? 2020 by The McGrawHill Companies, Inc. All rights reserved. McGraw Hill / Irwin 11 28 Eurocurrency Deposits ? Eurodollars are deposits of . dollars in banks located outside the . ? The large majority of Eurodollar deposits are held in Europe, although Europe’s share of the total is declining. ? 2020 by The McGrawHill Companies, Inc. All rights reserved. McGraw Hill / Irwin 11 29 Eurocurrency Deposits ? Eurodollars and other Eurocurrency deposits are continually on the move in the form of loans. ? They are employed to finance the import and export of goods, to supplement government tax revenues, to provide working capital for the foreign operations of multinational corporations, and to provide liquid reserves for the largest banks. ? 2020 by The McGrawHill Companies, Inc. All rights reserved. McGraw Hill / Irwin 11 30 Eurocurrency Deposits ? When a dollar deposit is moved to a bank located outside the ., that bank then holds claim to the original dollar deposit in the . ? When a Eurodollar loan is made, the borrower receives a claim against dollars deposited in . banks. ?Funds are merely passed from one . bank to another. The total amount of dollar deposits and . bank reserves remains unchanged. ? 2020 by The McGrawHill Companies, Inc. All rights reserved. McGraw Hill / Irwin 11 31 Eurocurrency Maturities and Risks ? Most Eurocurrency deposits are shortterm deposits ranging from overnight to one year, although a small percentage are longterm time deposits. ? Eurocurrency deposits are known to be volatile and highly sensitive to fluctuations in interest rates and currency prices. They also carry political risk and default risk. ? 2020 by The McGrawHill Companies, Inc. All rights reserved. McGraw Hill / Irwin 11 32 The Supply of Eurocurrency Deposits ?Eurocurrency deposits e from … ? foreign investment ? tourism ? balance of payments (trade) settlements ? interbank funds ? government funds ?large corporations’ cash balances ? central banks supplying or absorbing funds from the banking system ? 2020 by The McGrawHill Companies, Inc. All rights reserved. McGraw Hill / Irwin 11 33 Eurodollars in . Domestic Bank Operations ? Since the late 1960s, . banks have drawn heavily on Eurodollar deposits as a means of adjusting their domestic reserve positions. ? Eurodollars usually carry higher reported interest rates than many other sources of bank reserves. However, there are fewer legal restrictions on the borrowing of Eurodollars. ? . banks also aid their customers in acquiring Eurocurrency deposits and loans. ? 2020 by The McGrawHill Companies, Inc. All rights reserved. McGraw Hill / Irwin 11 34 Interest Rates on Eurodollar Deposits 33 . 544 . 555 . 566 . 51991 1993 1995 1997 1999 2020T re a s u ry Bi l l sC e rt i f i ca t e s o f D e p o s i tF e d e ra l F u n d sEu ro d o l l a r D e p o s i t s (L o n d o n )Data Source: Board of Governors of the Federal Reserve System % ? 2020 by The McGrawHill Companies, Inc. All rights reserved. McGraw Hill / Irwin 11 35 Benefits and Costs of the Eurocurrency