Potential Monetary Impact of Converting Debt to Equity Through the Creation of Money
|Total Debts1||Effect on M|
|Outstanding to||Money||of 5 precent|
|Commercial Banks||Supply (M)2||Conversion3|
|(In billions of dollars)||(In billions of dollars)||(In percent)|
Estimates from U.S. Federal Financial Institution Council and Bank for International Settlements, quoted by Cline (1987).
With the exception of Brazil, figures are estimates for end-1986 quoted in dollars. The money stock is considered as the sum of currency outside banks plus demand deposits held with the monetary system by the rest of the domestic economy, other than the central government. For Brazil, figures are for September 1987.
[(1)×0.05× 100]/(2) = (3).