Growth in Offshore Currency Deposits, Essay Example

In another question, the growth in Offshore Currency Deposits was addressed.  It was questioned whether or not offshore currency deposits have become more important over time.  In addition, it was indicated how much the offshore dollar deposits in the United States have grown since 1965.  Furthermore, the understanding of whether the offshore dollar deposits are a large percent of the domestic money supply in 2006.  As seen in Figure 3, there is a dramatic increase in the offshore currency deposit in the United States from 1959 to 2006.  In fact, the amount of deposit in 1959 was a 0.7 rate, compared to 400 in 2006. This data was taken from the Board of Governors of the Federal Reserve System (2012).  In regard to offshore dollar deposits being a large percent of the domestic money supply in 2006, refer to Figure 4.  As seen in Figure 4, the M1, which refers to the domestic money supply, there is 1000 billion dollars in 2006, compared to MB at 6500 Billion Dollars, which is the physical currency and M2 at fewer than 1000 billion dollars, which is the M1 plus savings accounts and money markets.  Therefore, the offshore dollar deposit was mostly a large percentage of the money since in 2004, there was over 400 Billion and continued to rise (Figure 3).

Figure 4.  MB, M1 and M2 in The United States from 1981 to Current

Table 1.  Monthly Exchange Rates for Denmark with Standard Deviations.

References

Board of Governors of the Federal Reserve System.  (2012).  Web. Retrieved: http://www.federalreserve.gov/datadownload/Choose.aspx?rel=H.6.

Coleman, J.  Treasury Working Paper: Economic Integration and Monetary Union.  Web. Access: http://www.treasury.govt.nz/publications/research-policy/wp/1999/99-06/08.htm.

Helliwell, John F. and Ross McKitrick (1998) Comparing Capital Mobility across Provincial and National Borders NBER Working Paper 6624.

The Federal Reserve System.  (2012).  Web. Retrieved from: http://research.stlouisfed.org/fred2/categories/15.