In its simplified form the balance sheet of the Bank of Canada (BOC) has "Securities" and "Loans to Financial Institutions" as its assets and "Reserves" and "Currency in circulation" as its liabilities. This question relates to the mechanism behind money creation, which involves the BoC, the Banking sector and the public. Start your discussion just after the BOC sells $150M worth of Canada bonds in an open market sale to a bank called "CWhyBC". Assume in this question that: Before the open market sale CWhyBC had $450M in Reserves and has attracted $2000M in Deposits. Assume also that CWhyBC initially has $150M in Bank Capital and $400M in Securities. All banks, including CWhyBC have a desired reserve ratio of 20%. Initially assume the public will not change their currency holdings (a) Draw up CWhyBC's balance sheet before the BoC open market sale. Clearly indicate its "assets" and liabilities" (b) Did CWhyBC have any excess reserves before the BoC open market sale? (C) Show the immediate impact of the BoC open market sale on the balance sheet of CWhyBC. In its simplified form the balance sheet of the Bank of Canada (BOC) has "Securities" and "Loans to Financial Institutions" as its assets and "Reserves" and "Currency in circulation" as its liabilities. This question relates to the mechanism behind money creation, which involves the BoC, the Banking sector and the public. Start your discussion just after the BOC sells $150M worth of Canada bonds in an open market sale to a bank called "CWhyBC". Assume in this question that: Before the open market sale CWhyBC had $450M in Reserves and has attracted $2000M in Deposits. Assume also that CWhyBC initially has $150M in Bank Capital and $400M in Securities. All banks, including CWhyBC have a desired reserve ratio of 20%. Initially assume the public will not change their currency holdings (a) Draw up CWhyBC's balance sheet before the BoC open market sale. Clearly indicate its "assets" and liabilities" (b) Did CWhyBC have any excess reserves before the BoC open market sale? (C) Show the immediate impact of the BoC open market sale on the balance sheet of CWhyBC