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Central bank independence and economic performance
Finance & Accounting
Pages 6 (1506 words)
Central Bank’s independence and economic performance Name: Student ID number: Professor’s name: Date of submission: Table of contents Executive Summary 3 Introduction 4 Role of central bank 4 Central Bank’s independence 4 Central bank and economic performance 6 Conclusion 8 Recommendation 8 Reference 9 Appendix 10 Central Bank’s independence and economic performance Executive Summary Central bank regulates money supply and interest rates through its monetary policies.
In order to achieve economic growth in a country, formation of capital is essential for fresh investments in the economy. Increase in aggregate demand in the country is an important factor in this regard for attracting investment of capital in new projects. Liquidity in the system as well as interest rates should be monitored and regulated on a continuous basis by the central bank to provide good environment for capital investment and consumption which in turn will generate demand for the products. However, the central bank should also ensure that it does not result in overheating of the economy. The independence of the central bank of the county is very important for exercising control over the commercial banks in the country through its monetary policies. Healthy banking sector in a country is a prerequisite for good economic performance of the nation. The monetary policies need to be complementary to the fiscal policies of the government to achieve its economic objectives. The fiscal policies are long term in nature. ...
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