Question
Large commercial banks maintain demand deposit accounts with one another, which facilitates the efficient functioning of the FX market Bank A is in London. Bank
Large commercial banks maintain demand deposit accounts with one another, which facilitates the efficient functioning of the FX market
Bank A is in London. Bank B is in New York.
The current exchange rate is 1.00 = $1.25.
A currency trader employed at Bank A buys 320m from a currency trader at Bank B for $400 settled using its correspondent relationship.
The following is the balance sheet of Bank A and show the balance sheet after the above transactions happened
Assets
Liabilities and Equity
OLD
NEW
OLD
NEW
deposit at B
600
?
Bs $ deposit
$1160
?
$ deposit at B
$1600
?
Bs deposit
1200
?
Cash in the Vault
1200
?
Other Liabilities
600
?
Other Assets
800
?
Owners Equity
1152
?
Total
3,880
?
Total
3,880
?
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Essential Personal Finance A Practical Guide For Students
Authors: Lien Luu, Jonquil Lowe, Jason Butler, Tony Byrne
1st Edition
1138692956, 978-1138692954
