tag:blogger.com,1999:blog-6704573462403312459.post3612266212257065797..comments2024-03-28T06:53:23.473-04:00Comments on Moneyness: Who signs a country's banknotes?JP Koninghttp://www.blogger.com/profile/02559687323828006535noreply@blogger.comBlogger11125tag:blogger.com,1999:blog-6704573462403312459.post-11165250220510969692014-02-05T14:28:15.934-05:002014-02-05T14:28:15.934-05:00"Notes at the Fed are not on the balance shee..."Notes at the Fed are not on the balance sheet, but only go on the balance sheet at their face value once they are sold to banks."<br /><br />... and of course they go on as liabilities.Tom Brownhttps://www.blogger.com/profile/17654184190478330946noreply@blogger.comtag:blogger.com,1999:blog-6704573462403312459.post-89401943720678394662014-02-05T14:27:14.879-05:002014-02-05T14:27:14.879-05:00Finally something I can contribute to:
"pret...Finally something I can contribute to:<br /><br />"pretty sure the U.S. and U.K. do the same thing."<br /><br />Yes, the US does. The Mint (part of Tsy) mints the coins and sells them at face value to the Fed (and it loses money on pennies and nickles!). Whereas notes are printed by the Bureau of Engraving and Printing (also part of Tsy), but they are sold at production cost to the Fed.<br /><br />Coins at the Fed are Fed assets. Notes at the Fed are not on the balance sheet, but only go on the balance sheet at their face value once they are sold to banks.<br /><br />I'm not 100% on all that, but I have looked into it and that was my conclusion. I might even be able to dig up references on that.Tom Brownhttps://www.blogger.com/profile/17654184190478330946noreply@blogger.comtag:blogger.com,1999:blog-6704573462403312459.post-69764635423490736362014-02-04T15:51:34.547-05:002014-02-04T15:51:34.547-05:00JP,
The Reserve Bank Governor signs it.
Funnily...JP,<br /><br />The Reserve Bank Governor signs it. <br /><br />Funnily, India used to have a one-rupee note signed by the Secretary, Ministry of Finance (in addition to issuing coins) with others signed by the Reserve Bank Governor but it no longer issues those one-rupee notes.Ramananhttps://www.blogger.com/profile/11123448543333785121noreply@blogger.comtag:blogger.com,1999:blog-6704573462403312459.post-64634788292057664012014-02-04T15:49:47.747-05:002014-02-04T15:49:47.747-05:00This comment has been removed by the author.Ramananhttps://www.blogger.com/profile/11123448543333785121noreply@blogger.comtag:blogger.com,1999:blog-6704573462403312459.post-73750927495864298782014-02-02T21:59:04.724-05:002014-02-02T21:59:04.724-05:00Mike, I kid you not. Here's an example from St...Mike, I kid you not. Here's an example from Stella/Lonnberg:<br /><br />"The negative equity problem of the Central Bank of Chile can be traced back to the financial crisis of 1982 the cost of which has been estimated at 33 percent of GDP. Initially the cost was borne entirely by the central bank but in 1987 the government made a partial recapitalization. This issue was not faced again until 2006 when the Congress approved a transfer of up to 0.5 percent of GDP per annum for a period of 5 years. The central bank has estimated that this capital infusion would advance the date at which it would have positive equity from 2041 to 2026, that is, by fifteen years. The central bank received US$606 million as the first part of this partial recapitalization on December 27, 2006."JP Koninghttps://www.blogger.com/profile/02559687323828006535noreply@blogger.comtag:blogger.com,1999:blog-6704573462403312459.post-70492268854378217582014-02-02T21:48:25.849-05:002014-02-02T21:48:25.849-05:00Their loss. It's good to speak two languages -...Their loss. It's good to speak two languages -- it gives you perspective.JP Koninghttps://www.blogger.com/profile/02559687323828006535noreply@blogger.comtag:blogger.com,1999:blog-6704573462403312459.post-83083021548493635352014-02-02T21:16:32.162-05:002014-02-02T21:16:32.162-05:00Ramanan, who signs Indian notes?
Nick, pretty su...Ramanan, who signs Indian notes? <br /><br />Nick, pretty sure the U.S. and U.K. do the same thing. Mints seem to have been always controlled by the sovereign, central banks were private (at least initially so). Perhaps the modern separation is an echo of this historical split?JP Koninghttps://www.blogger.com/profile/02559687323828006535noreply@blogger.comtag:blogger.com,1999:blog-6704573462403312459.post-67222486959901024292014-02-02T15:11:59.165-05:002014-02-02T15:11:59.165-05:00Good post and unexpected angle, since I usually he...Good post and unexpected angle, since I usually hear about governments plundering their central banks, rather than backing them up. Mike Sproulhttp://www.csun.edu/~hceco008/realbills.htmnoreply@blogger.comtag:blogger.com,1999:blog-6704573462403312459.post-12377005987467972472014-02-02T13:52:23.322-05:002014-02-02T13:52:23.322-05:00Neat! One weird thing about Canada (I wonder if an...Neat! One weird thing about Canada (I wonder if any other countries are the same?) is that the Bank of Canada issues notes and the Royal Mint issues coins, and the two are quite distinct. (I'm not sure of the exact legal and policy distinction involved.)Nick Rowehttps://www.blogger.com/profile/04982579343160429422noreply@blogger.comtag:blogger.com,1999:blog-6704573462403312459.post-46383186814903117512014-02-02T13:48:01.885-05:002014-02-02T13:48:01.885-05:00JP: "In the same way that all Americans only ...JP: "In the same way that all Americans only understand English while all foreigners are conversant in English and their native tongue, non-American commentators like me can't talk solely in terms of our own central bank (in my case the Bank of Canada) lest we fall out of the conversation. The Fed becomes our focal point."<br /><br />Yep. I make a point of writing "suppose the central bank....." or "suppose the Bank of Canada......" and commenters keep responding "But if the Fed...."Nick Rowehttps://www.blogger.com/profile/04982579343160429422noreply@blogger.comtag:blogger.com,1999:blog-6704573462403312459.post-50211164408098894542014-02-02T13:10:23.273-05:002014-02-02T13:10:23.273-05:00Nice post and nice reference.
Btw, the best answ...Nice post and nice reference. <br /><br />Btw, the best answer to "I promise to pay" is given by the Reserve Bank of India:<br /><br /><br />http://www.rbi.org.in/scripts/FAQView.aspx?Id=39#12<br /><br /><i>What is the meaning of "I promise to pay" clause?<br /><br />As per Section 26 of Reserve Bank of India Act, 1934, the Bank is liable to pay the value of banknote. This is payable on demand by RBI, being the issuer. The Bank's obligation to pay the value of banknote does not arise out of a contract but out of statutory provisions.<br /><br />The promissory clause printed on the banknotes i.e., "I promise to pay the bearer an amount of X" is a statement which means that the banknote is a legal tender for X amount. The obligation on the part of the Bank is to exchange a banknote for coins of an equivalent amount. </i> Ramananhttps://www.blogger.com/profile/11123448543333785121noreply@blogger.com