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🌏 | Supporting gradual rate hikes and early start of balance sheet contraction = SF Fed President


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Supporting gradual rate hikes and early start of balance sheet contraction = SF Fed President

 
If you write the contents roughly
"I think it's better for the Fed to adjust its policy rate at a slower pace and start shrinking its balance sheet earlier than in the previous cycle," said Daily.
 

[Reuters] – Daily Governor of the San Francisco District Fed, US, will raise interest rates at a moderate pace by the end of the year on the XNUMXth. → Continue reading

 Reuters


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Balance sheet

Balance sheetIsFinancial statementsone of.Balance sheet(English: balance sheets, Abbreviation: B / S) Is also called.

Overview

A balance sheet is a company'sAsset-liabilities-Net worthTo represent the state ofDouble entry bookkeepingBy the method calledProfit and loss statementCreated at the same time asShareholder-a creditorOtherStakeholdersProvide information on business conditions to. Also,Ltd.Then.Official gazette-News (Chinese)Or on the internetAnnouncement of financial resultsIs obligatory and will be announced together with the income statement.Generally, it is created at the time of opening, settlement of accounts, and settlement, and it may also be created monthly.An interim balance sheet may be prepared before the settlement of accounts.There is also an emergency balance sheet prepared on a market value basis in procedures such as corporate reorganization and bankruptcy.

As mentioned above, the balance sheet is at one point in the enterpriseAsset,liabilities, And is derived as the difference between the twoNet worthIt shows the amount of money, but the company has grown in size andGoing Concern AssumptionIn the present age when business activities are carried out under the Japanese accounting standards, the amount of assets and liabilities recorded on the balance sheet prepared by Japanese accounting standards does not purely indicate the property status of the company at one time. Not.For exampleAcquisition costDepreciability of machines, buildings, etc. capitalized byTangible fixed assetsIn the futureDepreciationExpenses through, as depreciationProfit and loss statementWill be recorded in.Taking into account the essence of the amount of depreciable property, plant and equipment recorded on the balance sheet based on this series of accounting treatments, the meaning of recording this on the balance sheet by acquisition cost will be depreciation expense in the future. It is believed that it will be found in temporarily accommodating the amount of money for this.In short, the balance sheet functions as a balance sheet to accommodate the gap between the balance sheet and the period attribution of profit and loss in order to perform proper period profit and loss calculation.Financial statementsThat is.If the balance sheet truly represents the financial position of the company, then all assets and liabilitiesMarket priceAnd even moreDeferred assetsIt is necessary not to record assets that do not have property properties such as You need to capture the balance sheet. (Revenue cost approach)

However, the accounting standards of Japan these days areInternational financial reporting standards (IFRS)ConvergenceProgresses,Asset retirement obligationsEtc.Asset Liability ApproachSince the accounts derived from are also recorded, if you focus only on a specific account, it is a direct indication of the property status of the company in itself. Caution must be taken.In this way, Japanese accounting standards areRevenue cost approachas well as the Asset Liability ApproachIn the original sense, because I tried to pursue both of these at the same time eclectically.Clean surplus relationshipHas collapsed.

It's called a balance sheetEnglishBilanz (alone) ・ Billan (Buddha) ・ Bilancio (Yi), etc. as well as European languages,LatinでLibraThe origin is libra bilanx which means. This is because the balance sheet is divided into left and right,Debit (debit) "and" on the right "Credit (credit) "is balanced.

Construction

The debit has an "asset section", which shows the amount of the asset of the company at a certain time. On the other hand, creditors are divided into "debt" and "net assets". Each of them describes the amount of debt and net assets of the company at a certain point in time. Shareholders first invested in the net assets sectionCapitalas well as the Capital surplusAnd brought about by corporate activitiesProfitFrom the accumulated amount ofdividendDeducted the amount leaked out of the companyretained earningsEtc. are described.

Assets and liabilities are generallyLiquidityFrom highest to lowest. This is called. However,Power companyetc,Tangible fixed assetsFor companies with special accounting rules, such as when the amount is large, is applicable.

Also, the total debit amount and the total credit amount are equal.So, for example, if you look at the credit from the debit, the source of funds for your total assets isForeign capital(Debt)net worthYou can see if it is (net assets).

Laws and regulations

Co., Ltd. is scheduledGeneral Meeting of ShareholdersThe balance sheet must be published without delay after the closing of (Company Law Article 440).

currentAnnouncement of financial resultsIn, there is a relationship of "assets-liabilities = net assets".

Main subjects

The display of each section isb: Article 74 of the Corporate Accounting Regulations - 76 articleStipulated in.

Examples of major balance sheet subjects
AssetPart ofliabilitiesPart of
Net worthPart of

(Note)Consolidated balance sheetUnique, * is mainly.

Balance sheet and management indicators

"× 100" ispercentageIndicates.

  • Current ratio (%) =current assets÷Current liabilities×100 → Short-term payment capability of the company (200% or more is appropriate)
  • Quick ratio (%) = Current assets ÷ Current liabilities x 100 → Immediate solvency (100% or more is appropriate)
  • (%) = Fixed assets ÷ Equity x 100 → net worthAgainstFixed assetRatio (less than 100% is appropriate)
  • = Fixed assets ÷ (Fixed liabilities + Equity capital) → Long-term payability (less than 100% is appropriate)
  • (%) = Equity ÷ Fixed assets x 100 → Fixed ratio of equity capital (100% or more is appropriate)
  • Debt ratio (%) = Debt ÷ Equity x 100 → Ratio of debt to equity (less than 100% is appropriate)
  • (%) = Equity ÷ Debt x 100 → Judge whether debt is appropriate for equity (100% or more is appropriate)
  • Return on equity (%) = Net income ÷ Equity x 100 → The higher this ratio, the greater the profitability
  • Capital adequacy ratio (%) = Equity ÷ Total capital x 100 → The higher this ratio, the more stable the management of the company (40% or more is appropriate)

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Policy interest rate

Policy interest rate(Seisaku Kinri,British: bank rate) IsCentral BankBut the generalbank(Commercial bank)LoanWhen doinginterest rate.

Central bankFinancial PolicyDetermined byBusinessIs set high when is good and low when the economy is bad. This will help when the economy is goodSavings,loanInterest rates have risen,currencyThe distribution of is suppressed. When the economy is bad, interest rates are lowered, which has the implication of promoting currency circulation.

Policy interest rates in Japan

Official discount rate

1994/(6)9Up toPrivate bank Ofinterest rate TheOfficial discount rateIt was regulated to interlock with (Kouteibuai)[1].. Official discount rateBank of JapanThis is the base interest rate applied when the Bank of Japan lends to a private bank. Changing the official discount rate is equivalent to changing the market interest rate in Japan, and the BOJ operates the official discount rate.Financial PolicyCould be done. Therefore, the official discount rate has long served as a policy interest rate for Japan.

But,1994/(6)10In addition, private bank interest rates are completely liberalized[1], It is no longer possible to use the official discount rate to manipulate private bank interest rates. The Japanese economy continues to deteriorate, and in the past, the official discount rate should have been lowered to lower interest rates.1995/(Heisei 7) From January2001/(13)2Until the official discount rate was not lowered, it remained at 0.5%.

After full deregulation of interest rates on private banks, private banks operate and raise funds instead of manipulating official discount ratesMoney marketInterest rate (Unsecured call overnightContinue monetary policy by manipulating the interest rate. In particularOpen market operationsWill allow the Bank of Japan toGovernment bond,BillBuyBuying operation(Buy operation) And continued to lower interest rates. Until March 1995, the official discount rate isOvernight call rateThe operation of the official discount rate was important because it was set at a lower level, but the overnight call rate is lower than the official discount rate thereafter.[2].

Unsecured call overnight

1999 yearsZero interest rate policyByUnsecured call overnightWas set as an inducing target and played the role of a policy interest rate. The current official discount rate serves as a ceiling on interest rates in money markets. BOJ2000/(12)8ToZero interest rate policyWas canceled,Financial insecurityTo prevent2001/(13)2ToLombard loan systemWas introduced. Poorly managed private banks have poor credit, which makes them unable to borrow in the money market or, even if they can, borrow at very high interest rates. This could lead to financial insecurity. To prevent thiscollateralIf there is, the BOJ has decided to lend to a private bank at the official discount rate without restrictions. With collateral, private banks were able to control financial instability by guaranteeing borrowing at the official discount rate, no matter how high. After that, the BOJ gradually lowered the official discount rate.2001/(13)May 9 OfAmerican terrorist attacksThe Bank of Japan has lowered the official discount rate to a record low of 0.1% as a result of heightened financial instability.2006/(18)May 7To2001/(13) The zero interest rate policy, which had been re-implemented from March, was lifted and the official discount rate became 3%.2007/(19)May 2The official discount rate was raised to 0.75%, but it was 2013% as of May 5.

Name change of "official discount rate"

The Bank of Japan2006/(18)May 8Changed the name of the statistics on "official discount rate" to no longer use the name "official discount rate"Standard discount rate and standard loan interest rateAnnounced.

This is because when the BOJ's operation target for controlling the financial markets is the interest rate on the money markets (interest rate for overnight unsecured calls/call rate), the Bank of Japan, which has been called the official discount rate until then, lends funds directly to financial institutions. This is because the base interest rate (base loan interest rate) has become less relevant as a policy interest rate, which is a measure of deposit and savings interest rates and bank lending rates. The official discount rate is the complementary lending system introduced in 2001 (Lombard loan system) Is the applicable interest rate, it will be the maximum interest rate when the BOJ induces the call rate.

Abolish interest rate target

In April 2013, the Bank of JapanQuantitative and qualitative monetary easing”, the operation target of financial market adjustment is from unsecured overnight call ratesMonetary baseWas changed to[3].

Introduction of negative interest rate and yield curve control

2016 Year of 1 MonthNegative interest rateSince the harmful effects of the introduction have come to be pointed out, at the meeting in September 2016, long-term interest rate operations should be performed using the limit operation of long-term government bonds (mainly 9-year bonds) (long- and short-term interest rate operations). became[4].

Policy interest rate of each country

The induced target interest rates of central banks of major countries are as follows.

Induced target interest rates (policy interest rates) of major central banks[5]
CountryName of induced target interest rateCharacteristic of induced target interest rate
British flag United Kingdombank rateO/N, central bank deposit rates
Canadian flag CanadaTarget for Overnight RateO/N, interbank
Australian flag Australiacash rateO/N, interbank
European Union flag Euro areakey ECB interest rateMain Refinancing Operation
(Mainly the operation interest rate for one week)
New Zealand flag New ZealandOfficial Cash RateO/N, interbank
 SwedenRepo rate7-day central bank deposit/lending rates
Swiss flag Switzerland3-month Libor interest rate3 months, private bank offered interest rate
United States flag The United States of Americafederal funds rateO/N, interbank

footnote

  1. ^ a b Hideomi Tanaka, Deflationary Depression, The Deadly Sins of the Bank of Japan, Asahi Shimbun, 2010, p. 221.
  2. ^ Takashi Oshio, "Introduction to Economics for High School Students," Chikuma Shobo <Chikuma Shinsho>, 2002, 177 pages.
  3. ^ BOJ introduces "quantitative and qualitative easing" List of target balances for each assetNihon Keizai Shimbun January 2013, 4
  4. ^ 2% "Price stability target" and "Quantitative and qualitative monetary easing with long- and short-term interest rate manipulation": Bank of Japan
  5. ^ Shirakawa [2008] p.128 Table 7-1-1 Induced target interest rates of central banks of major countries (policy target) O/N represents overnight interest rates for unsecured calls.

References

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