2. Basic operation of a bant Asset transformation资产转换 is the process 过程 in which banks make profits by selling liabilities with one set of characteristics 征( a particular combination组合 of liquidity risk, and return) and using the proceeds A to buy assets with a different set of characteristics Asset transformation is the process in which the bank borrows short and lends ong借短贷长”, because it raises funds by issuing short-dated deposits and makes long-term loans
2. Basic operation of a bank • Asset transformation资产转换 is the process 过程 in which banks make profits by selling liabilities with one set of characteristics特 征 (a particular combination组合 of liquidity, risk, and return) and using the proceeds收 入 to buy assets with a different set of characteristics. • Asset transformation is the process in which the bank “borrows short and lends long借短贷长” ，because it raises funds by issuing short-dated deposits and makes long-term loans
2. Basic operation -T-account Assets Liabilities Vault cash +$100 Checkable deposits +$100 Assets Liabilities Reserves +$100 Checkable deposits +$100
2. Basic operation －T-account Assets Liabilities Vault cash +$100 Checkable deposits +$100 Assets Liabilities Reserves +$100 Checkable deposits +$100
2. Basic operation -T-accouns Assets Liabilities Cash items In process +$100 Checkable deposits)+$100 of collection Assets Liabilities Reserves +$100 Checkable deposits +$100 Assets Liabilities Reserves 5100 Checkable deposits -$100
2. Basic operation －T-account Assets Liabilities Cash items +$100 in process of collection Checkable deposits +$100 Assets Liabilities Reserves +$100 Checkable deposits +$100 Assets Liabilities Reserves -$100 Checkable deposits -$100
2. Basic operation -T-accownt Conclusion: When a bank receives addtional deposits, it gains an equalamount of reserves when it loses deposits, it loses an equal amount of reserves ●当一家银行存款增加时,其准备金也等额增加 当存款减少时,其准备金也等额减少
2. Basic operation －T-account • Conclusion: • When a bank receives additional deposits, it gains an equal amount of reserves; when it loses deposits, it loses an equal amount of reserves . • 当一家银行存款增加时，其准备金也等额增加； 当存款减少时，其准备金也等额减少