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How can you explain this? Please explain in Taglish. Please give an example po na related sa topic para po mas lalong maintindihan. Thank you!
How can you explain this? Please explain in Taglish. Please give an example po na related sa topic para po mas lalong maintindihan. Thank you!
Banker to Government Lesson 5 1. Banker 2.Advisor 3.Agent Banker to the Government Banker It manages the account of the government It accepts receipts from the government and makes payment in behalf of it.4 . The credits the Exchequer accou the cheques were drawn Tax Payments BALANCE SHEET #1 - Company A ASSETS LIABLITIES Bank Deposits (1,000,000) Tax Liability (1,000,000) TOTAL (1,000,000) TOTAL (1,000,000) BALANCE SHEET #2 - Bank A ASSETS LIABLITIES Required Reserves (1,000,000) Company A Deposit (1,000,000) TOTAL (1,000,000) TOTAL (1,000,000) BALANCE SHEET #3 - Central Bank ASSETS LIABLITIES Government Deposit 1,000,000 Bank A - RR (1,000,000) TOTAL O TOTAL O Step 2: 1. The bank concerned, which does not hold Excess Reserve with the CB, is now in contravention of the reserve requirement 2. The bank requests an overnight loan from the CB, which is granted automatically Tax Payments BALANCE SHEET #4 - Bank A ASSETS LIABLITIES Required Reserves 1,000,000 Loan from CB 1,000,000 TOTAL 1,000,000 TOTAL 1,000,000 BALANCE SHEET #5 - Central BankASSETS LIABLITIES Loan to Bank 1,000,000 Bank A - RR 1,000,000 TOTAL 1,000,000 TOTAL 1,000,000 Net effect: 1. Company A: decrease in tax liability and bank deposits (see Balance Sheet 1) 2. Bank A: decrease in NBPS deposits and increase in loans from CB (see Balance Sheet 6) 3. Central Bank: increase in government deposits and in loans to banks (see Balance Sheet 7) BALANCE SHEET #1 - Company A ASSETS LIABLITIES Bank Deposits (1,000,000) Tax Liability (1,000,000) TOTAL (1,000,000) TOTAL (1,000,000) BALANCE SHEET #6- Bank A ASSETS LIABLITIES Company A Deposit (1,000,000) Loan from CB 1,000,000 TOTAL O TOTAL o BALANCE SHEET #7 - Central Bank ASSETS LIABLITIES Loan to Bank A Government Deposit 1,000,000 TOTAL 1,000,000 TOTAL 1,000,000 SCENARIO: Issuance of 1,000,000 worth of BondsReceipt of Loan Issues - Government: increases deposits and bonds in issue (see Balance Sheet 8) - CB: increase in government deposits and in loans to banks (see Balance Sheet 10) - Banks: increase in bond holdings and loans from CB (see Balance Sheet 9) Receipt of Loan Issues BALANCE SHEET #8 Government ASSETS LIABLITIES Deposits at CB 1,000,000 Bonds 1,000,000 TOTAL 1,000,000 TOTAL 1,000,000 BALANCE SHEET #9 Central Bank ASSETS LIABLITIES Loan to Bank 1,000,000 Government Deposits 1,000,000 TOTAL 1,000,000 TOTAL 1,000,000 BALANCE SHEET #10 Bank A ASSETS LIABLITIES Bonds 1,000,000 Loan from CB 1,000,000 TOTAL 1,000,000 TOTAL 1,000,000 Advisor The central bank advises the government on all the banking and nancial matters. - What if the CB decides to increase the Liquidity Shortage by 1,000,000 Monetary policy tool BALANCE SHEET #13 - Government ASSETS LIABLITIES Deposits at CB 1,000,000 Tax and Loan Account {1,000,000} TOTAL 0 TOTAL BALANCE SHEET #19 - Bank A ASSETS LIABLITIES Required Reserves (100,000) Ta: and Loan Account (1,000,000) Loans from C3 900,000 TOTAL (100,000) TOTAL (100,000) BALANCE SHEET #10 Central Bank ASSETS LIABLITIES Loan to Bank 900,000 Government Deposit 1,000, 000 Required Re serves (100,000) TOTAL 900,000 TOTAL 900,000 Agent It performs the task of managing the public debt. W > i :9? / TREASURY BULLS 1. Finance the budget decit by issuing Treasury Bills and Bonds 2. Refinance maturing debt or a debt redeemed before maturity date BUY BONDS Cancelled . Foreign bonds . Eurobonds . Global Bonds Domestic versus foreign debt. TREASURY BILLS ? BONDS ? Term structure of debt1. Exchequer Account - general account into which all receipts are placed 2. Paymaster General Account - department allocations are placed prior to disbursement Banker SCENARIO: Payment of1,000,000 amount 0fTax Thru Checks Step 1: l. Taxpayers (Company A) draw cheques on their bankers and deliver them to the revenue authority (RA). The RA deposits the cheques at the CB. The cheques are cleared and the taxpayers' accounts at their banks are debited,- the banks' accounts at the CB are debited The CB credits the Exchequer account and debits the banks on which the cheques were drawn 1. Tax and Loan Accounts (TLAs) - assist in the management of banking liquidity (the large commercial banks) Advisor BALANCE SHEET #1 C0mpanyA ASSETS LIABLITlES Bank Deposits {1,000,000} Tax Liability (1,000,000) TOTAL (1,000,000) TOTAL (1,000,000) ASSETS LIABLITIES Company A Deposit (1,000,000) Tax and Loan Account 1,000,000 TOTAL 0 TOTAL 0 Tax payments by individuals. Company A pays 1,000,000 in taxes (see Balance Sheets 1 8t 11) Issuance of government securities. We assume 1,000,000 bonds are purchased by CompanyA (see Balance Sheets 1214) BALANCE SHEET #1: Government ASSETS LIABLITIES ASSETS LIABLITIES Bank Deposits (TLA) 1,000,000 Bonds 1,000,000 TOTAL 1,000,000 TOTAL 1,000,000 BALANCE SHEET #13 - Company A ASSETS LIABLITIES Bank Deposits (1,000,000) Bonds 1,000,000 TOTAL O TOTAL BALANCE SHEET #14 - Bank A ASSETS LIABLITIES Company A Deposit (1,000,000) Tax and Loan Account 1,000,000 TOTAL O TOTAL O Disbursement of funds Procurement of goods from NBPS. Government purchases 1,000,000 goods from the Company A (see Balance Sheets 15-1 BALANCE SHEET #15 - Government ASSETS LIABLITIES Goods 1,000,000 Bank Deposits (TLA) (1,000,000) TOTAL O TOTAL BALANCE SHEET #16 -Company A ASSETS LIABLITIES Bank Deposits 1,000,000 Goods (1,000,000) TOTAL O TOTAL BALANCE SHEET #17 - Bank A ASSETS LIABLITIES Company A Deposit 1,000,000 Tax and Loan Account (1,000,000) TOTAL TOTAL OStep by Step Solution
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