1. Chapter 2 Principles of Money

2. 2  Defining money Defining money  Measuring money Measuring money  The monetary aggregates The monetary aggregates  Domestic nonfinancial debt Domestic nonfinancial debt  The economy &the aggregates The economy &the aggregates  ongoing evolution of the payments system ongoing evolution of the payments system

3. 3 Defining Money  Economists define money in terms of its specific functions  medium of exchange  eliminates the need for barter which requires a double coincidence of wants (raising transactions costs)  store of value  unit of account 货币：作为支付手段（即交换媒介）、记帐单位和 价值储藏手段的物品。

4. 4  货币的首要功能也是它独具的功能，是它可 以作为被普遍接受的支付手段。  能成为被普遍接受的支付手段的物品必须具 备价值储藏功能。  易货经济的高交易成本促进了货币的发展。 货币的存在方便了交易，进而促进了劳动的 专业化和分工。可见，金融体系的发展为经 济增长和发展做出了重要贡献。

5. 5 The Functions of Money $ Medium of Exchange A means of payment; something used in transactions to make payments Unit of Account The accounting unit or standardized measure of value in which prices are quoted Store of Value Something that retains its value if held

6. 6 Measuring Money  货币很难度量，随着经济金融体系的发展，执行 货币功能的物品也不断改变；一些金融索取权很 难分类。  Measuring the quantity of money is difficult  what is considered as money will need to be revised over time as the economy’s financial system evolves  some assets are difficult to classify as they are questionable in their uses as a means of payment  money market deposit accounts have limited check-writing privileges

7. 7 Measuring Money  Rather than relying on only one measure, the Fed hedges its bets by collecting, publishing, and monitoring data on monetary measures.  The items included in the various measures have changed over time as the financial system and new means of payment have evolved and as the Fed has strived to improve its monetary measures  联储监控和发布几种货币总量的数据，并且定期修 订和重新计算各组度量指标。

8. 8 Measuring Money  Because information about credit market activity can also provide useful information, the Fed further covers its bases by monitoring and publishing a broad measure of outstanding credit that measures unpaid loans and debts

9. 9 The Monetary Aggregates  As the monetary aggregate gets larger (from M1 to M2 to M3), it includes more less-liquid assets  M1 （通货加支票存款）是目前度量实现交易目的货 币供给的最好方法。  The measure that currently corresponds most closely to the definition of money is M1  all components are means of payment  currency in the hands of the public  checkable deposits

10. 10 The Monetary Aggregates  货币总量：央行监控并随时关注的货币指标 数据 ―― Ｍ１，Ｍ２，Ｍ３。  Ｍ１：通货加支票存款。  Ｍ２：Ｍ１加上其他高流动性资产。  Ｍ３：Ｍ２加上一些低流动性资产。

11. 11  货币，作为一种对商品和劳务的索取权，反 映了现实的购买力。  其他金融索取权反映了未来对货币的索取权。  金融索取权可以根据风险和流动性的不同与 货币进行比较以及相互之间进行比较。 (P 30 A Close Look Feature)

12. 12 Domestic Nonfinancial Debt  Domestic nonfinancial debt (DNFD) is a measure of the outstanding loans and debts accumulated in the present and past years.  debt owed by the federal government, state and local governments, private nonfinancial firms, and households  the debt of financial institutions is excluded to avoid double counting 国内非金融债务：国内非金融部门（政府及私人部门）在 信用市场上的债务合计。

13. 13 The Relative Size of the Monetary Aggregates and DNFD as of Year End 2003

14. 14 The Economy & the Aggregates  In the early and mid-1980s, M1 was the primary measure of money that the Fed watched

15. 15 During the late 1980s, M2 gained importance in the execution of monetary policy by the Fed  the relationship between changes in M2 and economic activity seemed more stable than that between changes in M1 and economic activity  20 世纪 80 年代末，联储使用 M2 （ M1 中的所 有项目加其他高流动性资产）指导其货币政 策实施。

16. 16 The Economy & the Aggregates  In the early 1990s, the stable relationship between changes in M2 and economic activity also seemed to break down  the growth rate of M2 moved in erratic and unpredictable ways  the Fed has deemphasized the use of M2 as a policy indicator  近年来，由于 M2 与经济活动的关系不再稳定， M2 的变动不再是经济活动的可靠指示器。

17. 17 The Economy & the Aggregates  In the early 1990s, the Fed increasingly used changes in the growth rate of DNFD as an indicator of the direction of the economy  if credit growth was increasing, then spending is likely to be going up  if credit extension was slowing, then the growth rate of economic activity was also likely to be slowing

18. 18 The Economy & the Aggregates  By the end of the 1990s, the Fed was using many other economic variables as barometers of economic conditions  the monetary aggregates were increasingly deemphasized in formulating policy  they are now used primarily as informational variables  联储已经寻找其他指标以帮助执行货币政策， 并仅使用货币总量作为信息变量。

19. 19 The Ongoing Evolution of the Payments System  The payments mechanism is the means by which transactions are completed  how money is transferred among transactors 支付机制：交易完成的方式，即货币如何在交易者 之间转移。

20. 20  A checkable deposit is a means of payment and the check is the method used to transfer ownership of the deposit  the check is not money  the balances in checkable deposits are money

21. 21 The Ongoing Evolution of the Payments System  In recent years, technology has greatly altered the way in which payments are made---an increasingly larger percentage of payments are made through an electronic funds transfer system( 电子资金支付系统： 该系统中对第三方的支付通过接受电子指令 而不是纸质的支票指令。 )  payments are made to third parties in response to electronic instructions rather than instructions written on a paper check  does not eliminate the need for deposit accounts

22. 22 The Ongoing Evolution of the Payments System  Other forms of electronic funds transfer systems are stored-value cards and smart cards  stored-value cards are plastic cards that have a certain amount of funds embedded on a magnetic strip( 储值卡：一种带有磁条的塑料卡 片，通过刷读器进行支付，用途比较单一。 )

23. 23  smart cards have a microprocessor chip embedded in them that stores information and usually includes a “digital signature”  智能卡：一种带有微处理器芯片的塑料卡片，可 以用于支付；芯片中存储着保证支付有效的信息 。

24. 24 The Ongoing Evolution of the Payments System  One of the best known forms of electronic transfer of funds is the automated teller machine (ATM)  permits an institution’s customers to make deposits and withdrawals 24 hours a day  自动柜员机：该机器保证即使在金融机构关门时， 存款者仍然能存款、取款。

25. 25 Summary of Major Points  The primary function of money, and the function that makes it unique, is that it serves as a generally acceptable means of payment  Something that becomes a generally acceptable means of payment will, of necessity, function as a store of value

26. 26 Summary of Major Points  The unit of account in the United States is the dollar  it serves as a common denominator or standardized unit of measure in which all prices and debts are quoted  The high transactions costs associated with barter encourage the development of money  money facilitates trade

27. 27 Summary of Major Points  Measuring money is not easy  what functions as money will change over time as an economy’s financial system evolves, and some financial claims may be difficult to classify  The Fed monitors and publishes data on several monetary aggregates and refines and recomputes the various measures periodically

28. 28 Summary of Major Points  M1 (currency plus checkable deposits) is the best measure of the money supply currently available for transactions purposes  in the late 1980s, the Fed used M2 to guide its execution of monetary policy  in recent years, the behavior of the aggregates has become less reliable barometers of economic activity

29. 29 Summary of Major Points  Money represents current purchasing power – a claim on goods and services  other financial claims represent future claims on money  financial claims can be compared to each other and to money in terms of risk and liquidity

30. 30 Summary of Major Points  The payments mechanism is the means used to transfer money among transactors  checks transfer ownership of checkable deposits  an increasingly larger percentage of payments are being made with electronic funds transfer systems  debit cards, stored-value cards, smart cards, ATMs