Chapter 2

Principles of Money

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

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Defining Money

Economists define money in terms of its specific functionsmedium of exchange

eliminates the need for barter which requires a double coincidence of wants (raising transactions costs)

store of valueunit 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。

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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。

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The Functions of Money

$

Medium of ExchangeA means of payment; something used in transactions to make payments

Unit of AccountThe accounting unit or standardized measure of value in which prices are quoted

Store of Value

Something that retains its value if held

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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

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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。

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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

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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 M1all components are means of payment

currency in the hands of the public checkable deposits

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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。

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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。 (P30 A Close Look Feature)

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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。

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

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The Economy & the Aggregates In the early and mid-1980s, M1 was the

primary measure of money that the Fed watched

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During the late 1980s, M2 gained importance in the execution of monetary policy by the Fedthe 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。

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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。

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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 economyif credit growth was increasing, then spending

is likely to be going upif credit extension was slowing, then the

growth rate of economic activity was also likely to be slowing

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The Economy & the Aggregates By the end of the 1990s, the Fed was

using many other economic variables as barometers of economic conditionsthe monetary aggregates were increasingly

deemphasized in formulating policythey 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。

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The Ongoing Evolution of the Payments System

The payments mechanism is the means by which transactions are completedhow 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。

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A checkable deposit is a means of payment and the check is the method used to transfer ownership of the depositthe check is not moneythe balances in checkable deposits are money

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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

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The Ongoing Evolution of the Payments System

Other forms of electronic funds transfer systems are stored-value cards and smart cardsstored-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。 )

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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 。

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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。

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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

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Summary of Major Points

The unit of account in the United States is the dollarit 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 moneymoney facilitates trade

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Summary of Major Points

Measuring money is not easywhat 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

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Summary of Major Points

M1 (currency plus checkable deposits) is the best measure of the money supply currently available for transactions purposesin the late 1980s, the Fed used M2 to guide its

execution of monetary policyin recent years, the behavior of the aggregates

has become less reliable barometers of economic activity

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Summary of Major Points

Money represents current purchasing power – a claim on goods and servicesother financial claims represent future claims on

moneyfinancial claims can be compared to each other

and to money in terms of risk and liquidity

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Summary of Major Points

The payments mechanism is the means used to transfer money among transactorschecks transfer ownership of checkable

depositsan increasingly larger percentage of payments

are being made with electronic funds transfer systemsdebit cards, stored-value cards, smart cards, ATMs