Japanese yen weakens to 160 against the USD since 1990

Re:Japanese yen weakens to 160 against the USD since 1990 by ArtTimeInvestor on Monday April 29, 2024 @02:14AM (#40195027)

    if Japan is importing many goods and services,
    they need to pay them in USD

Yes, and for this purpose, the Dollar is among the "stuff" the US produces: A currency accepted in many places.

    Most of the money is created by commercial banks

Say there is a new bank which has no central bank money, no deposits, nothing. First customer walks in and gets a credit of $100. Now the customer wants to pay these $100 to someone who uses a different bank. What happens?

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Re:Japanese yen weakens to 160 against the USD since 1990 by JumpCrisscross on Monday April 29, 2024 @02:22AM (#40195086)

> First customer walks in and gets a credit of $100. Now the customer wants to pay these $100 to someone who uses a different bank. What happens?

The first bank credits the account the different bank has with it in the amount of a hundred dollars. This involves updating a spreadsheet.

"Whenever a bank makes a loan, it simultaneously creates a matching deposit in the borrower’s bank account, thereby creating new money" [1].

[1] https://www.bankofengland.co.uk/-/media/boe/files/quarterly-...

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Re:Japanese yen weakens to 160 against the USD since 1990 by ArtTimeInvestor on Monday April 29, 2024 @02:58AM (#40195338)

That would only work if the two banks have an agreement. No established bank would make such an agreement with a bank that has no assets.

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Re:Japanese yen weakens to 160 against the USD since 1990 by JumpCrisscross on Monday April 29, 2024 @03:56AM (#40195713)

> That would only work if the two banks have an agreement

Yes. This is why not every pair of banks supports direct transfers.

> No established bank would make such an agreement with a bank that has no assets

Yes, it's a hypothetical you created.

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