When your lecturer makes a payment of AUD564 (EUR330) from her account at CBA to DKV, the following changes occur in CBA's balance sheet:

1. Assets: The bank's assets decrease by AUD564 as this amount is deducted from your lecturer's transactional account. This would be reflected in a decrease in "Customer Deposits" under the asset side of CBA's balance sheet.

2. Liabilities: Simultaneously, CBA's liabilities decrease by EUR330 as this amount is deducted from its Euro-denominated account at Societe Generale. This would be reflected in a decrease in "Due to banks" or "Deposits from banks" under the liabilities side of CBA's balance sheet.

The net effect on CBA's balance sheet is a decrease in both assets and liabilities by the respective amounts, leaving the overall balance sheet total unchanged.

As for the effect on the stock of private money and central bank money in Australia, the payment does not directly affect these.

Private money, in this context, refers to the deposits held by individuals and businesses in banks. The payment reduces your lecturer's private money holdings (her deposit at CBA) but does not affect the overall stock of private money in Australia as the money is simply transferred from one entity (your lecturer) to another (DKV).

Central bank money, also known as high-powered money or base money, consists of currency in circulation and bank reserves held at the central bank. The payment does not affect central bank money as it does not involve a change in the amount of currency in circulation or in bank reserves at the central bank. The transaction is simply a transfer of funds between accounts within the banking system.

In summary, the payment results in changes in CBA's balance sheet but does not affect the overall stock of private money or central bank money in Australia.

Question

When your lecturer makes a payment of AUD564 (EUR330) from her account at CBA to DKV, the following changes occur in CBA's balance sheet:

1. Assets: The bank's assets decrease by AUD564 as this amount is deducted from your lecturer's transactional account. This would be reflected in a decrease in "Customer Deposits" under the asset side of CBA's balance sheet.

2. Liabilities: Simultaneously, CBA's liabilities decrease by EUR330 as this amount is deducted from its Euro-denominated account at Societe Generale. This would be reflected in a decrease in "Due to banks" or "Deposits from banks" under the liabilities side of CBA's balance sheet.

The net effect on CBA's balance sheet is a decrease in both assets and liabilities by the respective amounts, leaving the overall balance sheet total unchanged.

As for the effect on the stock of private money and central bank money in Australia, the payment does not directly affect these.

Private money, in this context, refers to the deposits held by individuals and businesses in banks. The payment reduces your lecturer's private money holdings (her deposit at CBA) but does not affect the overall stock of private money in Australia as the money is simply transferred from one entity (your lecturer) to another (DKV).

Central bank money, also known as high-powered money or base money, consists of currency in circulation and bank reserves held at the central bank. The payment does not affect central bank money as it does not involve a change in the amount of currency in circulation or in bank reserves at the central bank. The transaction is simply a transfer of funds between accounts within the banking system.

In summary, the payment results in changes in CBA's balance sheet but does not affect the overall stock of private money or central bank money in Australia.

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