QUESTION 33

1. B3

   Consider the following transactions:

   (1) CBA makes a $50m interbank loan to ANZ.

   (2) ANZ repays $30m to the RBA as part of the completion of a repurchase agreement of government securities made in the past, with no interest.

   (3) NAB receives $0.5m in interest on its ESA from the RBA.

   (4) Westpac receives money at the redemption of $70m government bonds paid from the governments account at the RBA.

   (5) The RBA buys USD from the US Federal Reserve that, in total, are worth AUD 9m.

   (6) With its account at the central bank, the Australian government pays $1m social allowance to depositors of CBA.

   On a scrap paper, represent the changes in the balance sheet of the Reserve Bank of Australia (RBA). If several transactions affect the same item in the balance sheet, calculate the net change. Say you have +10 -2 for loans then you calculate +8.

   Then use your draft to fill the following multiple blanks. The scrap paper will not be uploaded but must be kept for future reference.

   For each blank either:

   type a sign + or - to represent the net change followed by one number (with no dollar sign and no million sign) or

   type X if that item is at a wrong location in the balance sheet or

   type 0 (the number 0 not the letter o) if that item is at the right location but does not change (in net or at all).

   Example: if you had in your scrap paper +$15m -$2m for loans on the asset you would simply type +13 in the blank associated with loans on the asset.

   RBA

   Assets Liabilities +Equity

   Notes on issue: Notes on issue:

   CBA ESF: CBA ESF:

   ANZ ESF: ANZ ESF:

   NAB ESF: NAB ESF:

   Westpac ESF: Westpac ESF:

   Government ESF: Government ESF:

   Government account: Government account:

   Fed account at the RBA: Fed account at the RBA:

   RBA account at the Fed: RBA account at the Fed:

   Securities: Securities:

   Equity: Equity:

   Household deposits: Household deposits:

   Loans: Loans:

   In net ESF changes by : If you are sure about your answer type that same answer twice, one in each box; if you hesitate between two answers type a different number in the second box (at most you will get half the mark).

   In net M0 changes by : If you are sure about your answer type that same answer twice, one in each box; if you hesitate between two answers type a different number in the second box (at most you will get half the mark).

   Without any further intervention of the RBA, as a result of the transactions above, the cash rate would Type + for an increase; - for a decrease and 0 for no change.