Question 3 Consider the following graph from the Reserve Bank of Australia Statement on Monetary Policy, August: here. Graph 3.10 Reserve Bank Liabilities 3b 500 400 300 200 100 100 0 0 JFMAMJJAS ON DJFMAMJ J 2020 2021 I Capital 8. Reserve Bank Reserve Fund IGovernmenl 8. olher deposits I Banknotes I Other Iiabiities I Exchange Settlement balances Source: REA Your task is to: (i) Explain why exchange settlement balances have increased so much since mid-2020. (ii) Describe which types of institutions own exchange settlement balances and for what purpose. (iii) Discuss what you would expect to happen to the total amount of exchange settlement balances from 2022-2024. In your response, consider the likely path for the economy and for monetary policy as projected by the Australian Treasury and the RBA. You may wish to illustrate your answers with appropriate diagrams. (Marks will not be allocated separately to points (i), (ii) and (iii). Rather an overall mark out of 10 will be given.)