The Nature of Payments and Institutions

Graeme S. Dorrance

Chapter 1 in National Monetary and Financial Analysis, 1978, pp 9-16 from Palgrave Macmillan

Abstract: Abstract In any society, there is a wide range of payments and a wide range of payers and payees. The transactions undertaken by individual economic units are responses to economic stimuli and have economic effects. All transactions have effects on a society’s asset/liability structure, even if it is only the transfer of money from one consumer (such as, a high-income professional) to another consumer (such as a low-income servant). In most cases, the effects of transactions on asset/liability structures are complex. Most final transactions are between producers (non-financial companies or self-employed individuals) and consumers (households), or between the government and these sectors, or between residents and non-residents. These transactions lead to immediate changes in individual balance sheets (for example, a producer — consumer transaction involves substitution between money and physical goods owned by the producer and consumer partners). These original changes in balance-sheet structures will usually encourage compensating changes in the direction of reconstructing previously prevailing structures. Many transactions have more complex effects. When assets are traded, not only will their ownership change, but the balance sheets of the traders will be altered, and, in many cases, these shifts will involve the incurment or extinction of liabilities. Such changes may be expected to have pervasive effects on the structure of interunit relations with repercussions on the demand for and supply of current economic resources.

Keywords: Central Bank; Financial Asset; Trade Credit; Financial Intermediary; Oxford English Dictionary (search for similar items in EconPapers)
Date: 1978
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DOI: 10.1007/978-1-349-15858-4_2

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