stigum” s phase on this is a relatively recent enhancement yet it” s and it still doesn” t actually go far enough so I” m mosting likely to claim points that are not really in stigm yet I” m going to begin with her so that we attach up okay and she begins on page 212 by speaking about uh where a euro dollar could originate from and her example is a company like um I better start to the left of this because I” m going to have 4 of these a company like Exxon dollars so she informs a tale regarding Exxon which is a big Company and Exxon has an account at Chase New York Chase Bank and it takes out some cash from that account and transfers it to Citibank in London all right so from New york city to London so this is a this is a financial institution branch that” s that ‘ s out of the abroad all right so there ‘ s minus Chase down payment plus City London deposit all right minus Exon down payment And also Exon deposit okay this is the this is what Exxon is trying to attain fine what actually takes place behind the scenes to work out every one of that in order to make that go what occurs behind the scenes is that chase fine transfers reserves from its account at the New york city fed alright and I” m not showing the New york city fed however we might do that also yet um Books at New York fed since it” s in New york city okay it ‘ s fed is the New york city fed it moves them to City New York City plus Reserves at the New york city fed alright and City New york city acts as uh the uh reporter Banker with City London Plus down payment City London all right so the manner in which the motion of these retail down payments occurs it” s moved they ‘ re moving from New York to London she makes a huge bargain stigma makes a huge bargain in guide that no money ever leaves the USA okay allow” s understand what she indicates by that what she suggests by that is these reserves all right there” s a debit of Chase ‘ s account at New York fed and there ‘ s a credit of cities account at the New york city fed and because sense there ‘ s no change in the amount of gets there” s just a modification from from the ownership of Chase and the possession of city and absolutely nothing is leaving the nation no gets are leaving the country that” s real all right however something is leaving the nation all right this down payment is leaving the country um and and city city in that and that” s cash fine so there ‘ s a sense in which cash is leaving leaving the nation what” s vital to value is that now these down payments that City London has in City New york city are essentially reserves that” s the city London can not have a deposit account at the FED it’can not have it ‘ s not permitted but it can have a bank account at a bank that has a deposit account at the fed and so it can kind of indirectly have a bank account at’the fed which ‘ s what it ‘ s running so it has these deposits and the method it will certainly it utilizes them as money the means it if Exxon intends to move this down payment to someone else alright City London uses its deposits in in New york city to do that so there ‘ s these like layers of gets that are happening obtained that now this is stigm” s example and I think that it actually may be better if we wear” t think of Exxon as moving its money to a bank like City London this is a branch of Citibank okay so this sort of covers a little bit of what” s going on because you could believe that the Consolidated annual report of Citibank these are sort of bogus little access you recognize this is this is Citibank owing to itself really one branch owing to one more Branch so it” s type of simply corporate accountancy or something and that truly these are the books that are backing this fine so so it doesn” t make the point strong sufficient so I want to recommend changed variation of this where Exxon is moving its cash to debt Leone and credit rating Leone is using a deposit at City New York as its Reserve okay so its deposit is in one more bank a various financial institution not its own financial institution that makes it much clearer what” s taking place right here that this is a contributor kind of partnership you” re not mosting likely to consolidate these balance sheets and check out them and say these books really come from this deposit that” s definitely not the method city city New york city would certainly claim city in New york city would certainly state these books come from this deposit right here all right and that” s it so the when we discuss Euro dollars we” re speaking about this things below that” s on the annual report of banks that are outside the United States now we have this financial institution credit report Leone credit history Leones it” s a financial institution it can go right into the dollar deposit company it can go into the dollar lending service it has Gets in its reporter bank plus buck lendings plus buck deposits you understand it can make finances by producing down payments okay and if somebody withdraws those deposits it can use these down payments in New york city to make to make repayment fine so it can enter into the buck loaning and loaning service although it” s in France
