Back dating bank deposits
Additionally, if they did this their liquidity ratios (one of the key measures of any bank’s soundness) would steadily deteriorate, restricting their ability to make further loans.
Personally, I doubt it is, as I cannot conduct payment transactions with my bank account – I need to be able to withdraw the funds first.
Have you ever come across electronic payment systems during your many years in these roles?
The financial markets pay little credence to cash as it is “almost” impossible to settle a 0m trade in these markets with cash!
That may well be a standard (and useful) measure for economic policy questions.
However, to me, the total amount of funds in an economy does not include bank deposits (whether chequing or otherwise) but does include total liquid funds (cash, government bonds etc.) held by the banks – a much smaller figure.That may well be so – but if you are going to count the likelihood of the government stepping in and printing as part of the money supply then that should be explicitly acknowledged, not implicitly included by counting all bank deposits.