Assume the following transactions occur sequentially:
a. The DMV Corporation, based in New Orleans, converts a $ 3 million demand deposit held at the New York Money Center Bank to a $ 3 million Eurodollar deposit held at Barclays Bank in London.
b. Barclays Bank opens a $ 3 million Eurodollar deposit at the Bank of England in London.
c. The Bank of England makes a $ 3 million Eurodollar loan to Pflug & Company in England. Provide T- accounts for DMV, New York Money Center Bank, Barclays Bank, and the Bank of England that describe each set of transactions. Explain how many Eurodollar deposit liabilities were created at each stage and what happened to the original demand deposit held by DMV.

  • CreatedNovember 03, 2015
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