05 - Payment System
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Facilitates the transfer of value from one party to another for financial transactions.
Large-value transactions that are cleared by real-time gross settlement.
Electronic Funds Transfer at Point of Sale (EFTPOS)
Electronic system that facilitates blue transactions for goods and services.
Internet banking service that enables funds to be transferred to any financial institution in Australia.
Exchange Settlement Account
Same-day funds held with the Reserve Bank.
Facilitates settlement of payments system value transactions.
Funds that do not require clearing through the payments system.
Required for exchange settlement account.
Real-time Gross Settlement (RTGS)
High-value payments system.
Transactions are settled immediately through exchange settlement accounts.
Possibility that one party to a financial transaction will not deliver value.
Risk that the failure of an institution will adversely affect the market as a whole.
Change in economic activity over time through cycles of expansion and contraction.
- Peak = Highest level of activity.
- Trough = lowest level of activity.
Gross Domestic Product (GDP)
Aggregate value of goods and services produced within a domestic economy.
Balance of Payments
Record of a country's transactions with the rest of the world.
Liquidity Effect on Interest Rates
Effect on the money supply and system liquidity of a central bank's open market operations.
Income Effect on Interest Rates
Interest rates rise = economic activity slows, incomes will fall, thus allowing rates to begin to ease.
Inflation Effect on Interest Rates
Economy slows = upward pressure on prices will ease, thus allowing rates to fall.
Economic sector data that provide some insight into possible future economic growth.
Leading = economic variables that change before there is a change in the business cycle.
Coincident = Economic variables that change at the same time as the business cycle changes.
Lagging = Economic variables that change after the business cycle has changed.
The amount of funds available for lending within the financial system.
Public Sector Borrowing Requirement
Total borrowing requirements from various levels of government and their instrumentalities.
Total amount of money in an economy .
Includes currency and deposits with financial institutions.
Normal cash holdings are reduced and invested in financial instruments.
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