StudentShare
Contact Us
Sign In / Sign Up for FREE
Search
Go to advanced search...
Free

4b: Report (Currencies) - Essay Example

Cite this document
Summary
That is, are these changes likely to affect the amount of foreign deposits in the bank? Why, or why not?
The structure of commercial banking industry in the United States is…
Download full paper File format: .doc, available for editing
GRAB THE BEST PAPER92.6% of users find it useful
4b: Report (Currencies)
Read Text Preview

Extract of sample "4b: Report (Currencies)"

Eric Brockett, BankZero Regional Manager [Click here and type , Assistant Manager Currency Risk Instructions For this assignment you will write a 300- to 500-word memo to Eric Brockett assessing foreign currency risk. Your report shouldbriefly describe the similarities and differences between the U.S. financial system and the Japanese financial systemexplain whether the factors listed in the report below are likely to cause appreciation or depreciation of the yen/dollar exchange ratedescribe how the changes in the exchange rate would affect the demand for dollars by foreign companies.

That is, are these changes likely to affect the amount of foreign deposits in the bank? Why, or why not?Be sure todelete these instructions before sending this file to your faculty memberwhen you save the document, include your last name, first name, and assignment title in the filename (e.g., smith_john_assignment1a)Comparison of the US financial system with Japanese financial system The structure of commercial banking industry in the United States is radically different from that in other industrialized nations.

The United States is the only country that is just now developing true national banking system in which banks have branches throughout the country. One result is that there are many more banks in the United States than in other industrialized countries. In contrast to the United States, which has on the order of 10,000 commercial banks, every other industrialized country has well under 1000. Japan, for example has fewer than 100 commercial banks – just 1 percent of the number in the United States, even though its economy and population are half the size of the United States.

Another result of the past restrictions on branching in the United States is that our banks tend to be much smaller than those in other countries. Compared to the financial system in the United States, Japan has more legislative independence. The Bank of Japan is not formally independent of the government, with the ultimate power residing with the Ministry of the Finance. In addition, Ministry of Finance bureaucrats alternate with officials from the Bank of Japan as governor of the bank. However, by tradition it is understood that the government should not override the Bank of Japan’s decisions about monetary policy, and the government has never invokes the provisions allowing it to override the bank.

What are the factors causing the appreciation and depreciation of the Japanese Yen? Japan was latecomer to the banking crisis. As in other countries, financial disclosure and monitoring the regulators did not keep pace with the new financial environment. The result was that banks could and did not take excessive risks, and when property values collapsed in the early 1990s, the banks were left holding massive amounts of bad loans. For example, Japanese banks decided to get into the mortgage lending market by setting up the so-called jusen, home mortgage lending companies that raised funds by borrowing from banks, and then loaned these funds out to households.

Seven of these jusen are now insolvent, leaving banks with $60 billion or so of bad loans. The Japanese seem to be going through the same cycle of forbearance as occurred with the United States. It has proved difficult to arrange bail out packages to close down insolvent banking institutions, and so, not surprisingly, regulators have been reluctant to close them down. Bank regulators have promised that none of Japan’s largest 21 banks will be allowed to fail, an admission of a too-big-too-fail policy similar to that found in the United States.

Describe how the changes in the exchange rate would affect the demand for dollars by foreign companies. That is, are these changes likely to affect the amount of foreign deposits in the bank? Why, or why not? In the analysis, we treat the United States as the home country so domestic bank deposits are denominated in dollars. For simplicity, we use francs to stand for any country’s currency, so foreign bank deposits are denominated in francs. The theory of portfolio choice suggests that most important factor affecting the demand for domestic (dollar) deposits and foreign (franc) deposits is the expected rate of return for these assets relative to each other.

When Americans or foreigners expect the return on dollar deposits to be high relative to the return on foreign deposits, there is a higher demand for dollar deposits and a corresponding lower demand for franc deposits. To understand how the demands for dollar and foreign deposits change, we need to compare the expected returns on dollar deposits and foreign deposits.Milton Friedman and Anna Jacobson Schwartz, A Monetary History of the United States, 1867-1960

Read More
Cite this document
  • APA
  • MLA
  • CHICAGO
(“4b: Report (Currencies) Essay Example | Topics and Well Written Essays - 500 words”, n.d.)
4b: Report (Currencies) Essay Example | Topics and Well Written Essays - 500 words. Retrieved from https://studentshare.org/miscellaneous/1545173-4b-report-currencies
(4b: Report (Currencies) Essay Example | Topics and Well Written Essays - 500 Words)
4b: Report (Currencies) Essay Example | Topics and Well Written Essays - 500 Words. https://studentshare.org/miscellaneous/1545173-4b-report-currencies.
“4b: Report (Currencies) Essay Example | Topics and Well Written Essays - 500 Words”, n.d. https://studentshare.org/miscellaneous/1545173-4b-report-currencies.
  • Cited: 0 times

CHECK THESE SAMPLES OF 4b: Report (Currencies)

Civil Aerospace Market and Aircraft Construction Industry

Moreover, alterations in the value of currencies within all countries should be avoided at the highest possible level trying to keep the balance among economies in the global marketplace.... The paper states that a firm that is interested in improving its position with the civil aerospace industry should examine the following sectors: facilities offered to its customers, methods, and cost of transportation of its products, application of appropriate inventory....
6 Pages (1500 words) Report

Storm Drainage Project

The report "Storm Drainage Project" presents a detailed analysis of hydrographs that would be of much help to estimate the flood potential of the region of Cynon River in Wales.... nbsp;A storm hydrograph is the graphical representation of the response of the river discharge concerning heavy rainfall....
7 Pages (1750 words) Report

What Will Be the Advantages and Costs to Transition Economies of Replacing their Currencies by the Euro

This paper "What Will Be the Advantages and Costs to Transition Economies of Replacing their currencies by the Euro?... nbsp; Initially, the old national currencies became sub-units of the Euro, as part of the phase-in process of single currency conversion (Euro coins, n....
9 Pages (2250 words) Report

Using the Disk Head Simulator

This report "Using the Disk Head Simulator" discusses secondary storage as a very significant component of a computer's operating environment.... It provides an important large storage space that can permanently hold systems software and any other desired user data.... hellip; Secondary storage can also be utilized as a backup to ensure that the computer system is reliable and that data carried is safe....
9 Pages (2250 words) Report

The Relationship between Age

This report ''The Relationship between Age'' is about the relationship between age and wishes to obtain the ideal mate.... It is commonly observed that youngsters develop the image for their life partner in their tender minds.... In the initial years of youth, they are optimistic about having the perfect mate....
10 Pages (2500 words) Report

New Payment Form in Times of Globalisation

The paper "New Payment Form in Times of Globalisation" describes that online methods of payments are vulnerable to fraud.... An example is Pay Pal whereby the site is vulnerable to hackers, who can use their computer skills to hack into the website and steal money.... hellip; More people will begin using the services of the company leading to an increase in the sales of the organization....
8 Pages (2000 words) Report

Statistics Project Survey

The report "Statistics Project Survey" focuses on the critical statistical analysis of the project survey data on macroeconomics.... nbsp;The global recession that was witnessed in 2008 to 2009 in the US had adverse implications for the management operations.... hellip; There were increased allegations of unethical business behavior among the management officials and the executives; an observation was made by the Wall Street Executives, Corporate Officers, and the Financial Managers....
8 Pages (2000 words) Report

IQ Corporation Network Planning and Design

The author of the paper "IQ Corporation Network Planning and Design" will begin with the statement that as per the requirements of the IQ Corporation, the network requirements are set out, and out network consultant group will be tasked with the design of the IQ Corporation network.... nbsp;… The IQ Corporation is also considering increasing voice services through VoIP, this will be done using the MDF/IDF connections, and on every floor (with) respect to a number of users, Cisco IP phones will be added to their working area....
5 Pages (1250 words) Report
sponsored ads
We use cookies to create the best experience for you. Keep on browsing if you are OK with that, or find out how to manage cookies.
Contact Us