The supply of money
is key ingredient in the real estate
market. Two basic control mechanisms are
associated with money supply.
The Federal
Bank
Although the Federal
bank can't directly increase or
decrease the money
supply at will, since it regulates the
supply of paper
currency in circulation.
The Federal
Bank represent only a small portion
of all the
money
circulating in the economy at any one time.
The amount ofmoney in
circulation can be measured in a number
of different
ways. Some of
these different measures, which are called
monetary aggregates, are described below:
The currency (bank
notes and coins) in circulation plus
personal chequing accounts and current
accounts at banks, are referred to as
M1.
A broader measure, M2, also includes
personal savings accounts and other
chequing accounts, term deposits, and
non-personal deposits requiring notice
before withdrawal.
But banks are not the only providers
of deposit
facilities, so an even broader measure
ofmoney is
provided. M2+ includes all deposits at
non-bank
deposit-taking institutions,
money-market
mutual funds, and individual annuities
at life insurance companies.
Voluntary
Controls
Commercial banks and other financial
institutions provide the greater part
of assets used
as money
through loans made to individuals and
businesses. In that sense, financial
institutions are creating
money
and in such indirectly effecting the money
supply.
In difficult economic
times, lenders may be more restrictive than
in periods of prosperity thereby limiting
the flow of money.
Looking to Buy or Sell Luxury
Real Estate In Toronto, North York, Thornhill,
Woodbridge, Vaughan, Richmond Hill, Aurora, King
City and beyond...visit LuxuryBroker.ca
Mortgages247.ca 2011 Apply Online without Blackouts Mortgages247.ca is designed to provide competent and
reliable information regarding the subject matter covered. However it is
provided, free of charge, with the understanding that the authors are not
engaged in rendering legal, financial or other professional advice. Law and
practice often vary from province and province and if legal or other expert
assistance is required, the services of a professional should be sought. The
authors specifically disclaim any liability that is incurred from the use or
application of the contents of this website.
