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Category: How It Works
Testing Gatsby
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Testing The New Gutenberg
This is how the post would look like.
Why did remittances (money sent back home by immigrants) to low and middle-income countries hit an all-time high in 2018?
All empirical evidence suggests that the US Dollar got stronger against other currencies and hence people sent more. One would believe that if the beneficiary country’s currency depreciates, the same amount of money will come in, just more in local terms. Turns out, people try to send in more money to take advantage of the […]
Where does the money for transfer payments come from?
It depends: It is either pre-funded, i.e. arrangements are made to have enough money on the other side, so that when a payment is made, the money is taken out of the available balance and paid for. The other arrangement is credit (which has a counter party risk factor higher than the pre-funded one). In both cases, […]
From an economic and political point-of-view, what is happening in the UAE today?
A lot is happening in Dubai… I’m fascinated by this city and could never understand it, despite coming here for over 15 years. Rentals Let us start with the most obvious: Rents. Rents are falling… so that is a sign of a retreating economy, one that is shrinking. I’ve spoken to various property dealers who […]
What would happen if I stole 10 cents from every bank account in the world, but paid it all back from my invested billions?
With roughly 7 Billion people in the world and 2 Billion being unbanked. You have essentially 5 Billion Bank Accounts to steal from. 5 Billion x 10 cents = $500 Million. Now sure how much you will make from your invested $500 Million. It is not the invested billions you had thought of. Even if you assume […]
How did travelers (e.g., aristocrats on their continental tours) access funds before the invention of credit cards and global banks? There were no ATMs and presumably carrying enough cash to last the whole trip would’ve been too dangerous.
Credit Lines. In the olden days, if you were traveling outside your banking circle so to speak, you took with you credit notes that were honored in various other cities. Sometimes these notes were coded, sometimes they were carried by external couriers in advance and sometimes you carried it yourself. That is the whole premise […]
How does money flow physically in remittances?
It doesn’t! (unless of-course you are operating a 100% cash only money transfer network – an example of which I do not know of). To understand how cash is transferred between countries, read this answer: Faisal Khan’s answer to Where do currency exchanges get their currency? To understand how money transfer works between countries, including remittances, […]
When a new currency is created, how does that money get from the central banks to circulate among the people?
When a central bank creates new paper currency, it is sold off to the commercial (high-street) banks, a process known as seigniorage. The commercial banks then distribute this money via their cash management division through all the channels they have, predominantly, ATMs and Over-the-Counter. If the new currency in replacing old currency, then customers usually […]