Money Creation and the Federal Reserve: Around the World

Swiss banks are the worlds largest holder of offshore funds. However, changes in banking laws in Switzerland have reduced the popularity of Swiss accounts among foreigners in recent years.

Suppose a wealthy family decides to move $50 million from their Swiss bank account to their Bank of America account. Assume an 8% reserve requirement in the United States and that Bank of America holds no excess reserves.

Complete the Taccount for this transaction.

Bank of America Assets	Change ($)	Bank of America Liabilities	Change ($)
Reserves		Deposits
Loans

In the change($), the options are $50 million, $0, $4 million, or $46 million.