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Which of the following is NOT an advantage of the clearinghouse system relative to a bilateral system of

bank payments?
Clearinghouses do not permit negative balances intraday
Negative balances are the source of the relative elasticity of a credit payments system

Which of the following is NOT an accurate description of dealers in the Fed Funds market?
Dealers match buyers and sellers without taking positions on their own balance sheets
Brokers, not dealers, match buyers and sellers without taking positions on their own balance sheets

Which of the following statements about bank payment systems is NOT true?’
When a bank borrows in the Fed Funds markets, the balance sheet of the Fed expands
Fed Funds are interbank credit, not Fed credit

A customer of Bank A orders payment to a customer of Bank B, but Bank A does not have sufficient
reserves on hand to make the payment. Which of the following methods would NOT be used to make
the payment?
Issuing bank notes : which Bank B refuses to accept as payment

Which of the following is a property of Fed Funds?
Promise to pay reserves


Which of the following statements is NOT true about the operation of the bank clearinghouse
association under the national banking system (before the Fed)?
The clearinghouse was unable to provide elasticity for its members during a crisis
Clearinghouse certificates provided elasticity, but only for members, and their legal status was shaky