[Joseph_E._Stiglitz,_Carl_E._Walsh]_Economics(Bookos.org) (1)

Table 28.2
GLOSSARY OF FINANCIAL TERMS
One of the problems in defining money is the wide variety of assets that are not directly used as a medium of exchange but
can be readily converted into something that could be so used. Should they be included in the money supply? There is no
right or wrong answer. Below are definitions of eight terms, some of which have been introduced already. Each of these
assets serves, in progressively less satisfactory ways, the function of money.
Currency
Traveler’s
checks
Demand deposits,
or checking
accounts
Savings deposits
One, five, ten, twenty, and hundred
dollar bills; pennies, nickels
dimes, quarters, and half dollars.
Checks issued by a bank or a
firm such as American Express
that you can convert into currency
upon demand and are widely
accepted.
Deposits that you can withdraw
upon demand (that is, convert
into currency upon demand),
by writing a check.
Deposits that technically
you can withdraw only upon
notice; in practice, banks allow
withdrawal upon a demand
(without notice).
Certificates of
deposit
Money market
accounts
Money market
mutual funds
Eurodollars
Money deposited in the bank for a
fixed period of time (usually six
months to five years), with a penalty
for early withdrawal.
Another category of interest-bearing
bank checking accounts, often
paying higher interest rates but with
restrictions on the number of checks
that can be written.
Mutual funds that invest in Treasury
bills, certificates of deposit, and
similar safe securities. You can usually
write checks against such
accounts.
U.S. dollar bank accounts in banks
outside the United States (mainly in
Europe).
These innovations make it easier for people to obtain credit. But they also have
changed how economists think about the role of money in the economy—blurring
definitions that once seemed quite clear.
Case in Point
“BOGGS BILLS” AND THE MEANING
OF MONEY
J. S. G. Boggs is an artist who explores the social meaning of money. He starts by
drawing one side of a banknote, completely accurate except for some crucial details.
The bill might say “In God We Rust” instead of “In God We Trust.”
With the Boggs bill in hand, the artist sees if someone will accept it at face value
in payment for actual goods or services. For example, he might offer a restaurant a
$20 Boggs bill in exchange for a meal. If the restaurant accepts the bill and provides
any change, Boggs notes the details of the transaction on the bill before turning it over.
Boggs then sells the receipt and the change. An art dealer might purchase the receipt
and change and then track down the restaurant and try to buy the Boggs bill. The
CREATING MONEY IN MODERN ECONOMIES ∂ 619