StudentShare solutions
Got a tricky question? Receive an answer from students like you! Try us!

Research Paper example - Central Bank and Monetary Policy

Only on StudentShare
Research Paper
Finance & Accounting
Pages 20 (5020 words)
Today every central bank around the world creates money, controls monetary policy and provides loans to the commercial system and supervises it (Cechetti & Schoenholtz, 2011, Chapter 15). In times of need, the central bank’s duty is to save the financial system. …

Extract of sample

This paper deals with central bank objectives, instruments and theory behind them. Five objectives of central banks will be described and discussed. Central banks’ objectives are price stability, stable real growth, financial stability, and interest rate and exchange stability. Then, direct and indirect tools of monetary policy will be described and discussed. Direct tools affect directly the economic agents (Alexander et al., 1996, p.14). Indirect tools affect bank reserves (Alexander et al., 1996, p.14). Direct instruments are: interest rate controls, credit ceilings, and directed lending to the authorities (Alexander et al., 1996, p.14). Indirect instruments are open market operations, reserve requirements, and central bank lending facilities (Alexander et al., 1996, p.14). Advantages and disadvantages of both will be discussed. It will be described how the central banks control the economy through money supply and how price stability is related to other objectives of central banks, but only as long as money supply can be controlled by the central bank. Finally, United Arab Emirates (UAE) will be shortly analyzed and the performance of their central bank will be discussed. It will be shown that the central bank of UAE’s focus is on exchange rate and economic stability. Since the UAE dirham is pegged to the US dollar, inflation cannot be controlled by the central bank of UAE as its monetary policy is restrained by the peg. Instead, it depends on the inflation in the USA, since the USA is free to adjust its monetary policy. ...
Download paper
Not exactly what you need?

Related papers

Monetary and Fiscal policies
The major types of monetary polices are fixed exchange rate, floating exchange rate and inflation targeting. In their effort to address inflation and deflation, central banks emulate various monetary policy tools. These include monetary base, reserve requirements, discount lending rates, exchange requirements, margin requirement, regulation of consumer credit and moral suasion. Being the regulator…
2 pages (502 words)
Finance and Accounting Research Paper: Monetry - Central Bank
Reckless and fraudulent behaviors of other financial institutions and banks are prevented as the central banks have the supervisory powers (Padoa-Schioppa, 2002). The goals of central banks are generally specified as price stability, stable real growth, financial stability, interest rate and exchange rate stability. 1. Discuss briefly the five objectives of central banks. Following are the main…
23 pages (5773 words)
Dividend Policy Corporate Finance Essay
Dividend policy are a very important and crucial decision for any firm and needs to be taken in a planned manner so as to have a positive impact on all stake holders. The dividend policy needs to be clearly defined and may change every year depending upon the dynamic nature of the business. The firm can choose to retain all the earnings or pay them out as dividends or even strike a balance in the…
3 pages (753 words)
The mechanism of the money multiplier
This paper will aim to provide an explanation and illustration of the essential mechanisms behind the concept of money multiplier and intensively the manner monetary authorities can control its size and influence money supply in the economy. First, an overview of money measure will be put forth. Secondly, the mechanism in light of money multiplier will then be explained by use of symbols and…
4 pages (1004 words)
Central bank
Low education levels as well as underdevelopment are also a common feature in these countries and thus making them depend on foreign labour. In a strive to improve their economy, the GCC countries have tried to diversify their economic activities after realizing that the natural resources are in the process of getting depleted and therefore inculcated capital intensive projects (Cobham & Ghassan…
4 pages (1004 words)
GCC central Bank
The objectives of the Central bank and the proposed functions of the Central Bank in GCC have been proposed to uphold the best interest of the Gulf economy. Introduction The banking industry of Gulf Cooperation Council is based on then six main GCC countries- Saudi Arabia, Kuwait, Bahrain, Oman, Qatar and the United Arab Emirates. The GCC central bank is likely to face new opportunities and…
6 pages (1506 words)
GCC central bank
Key findings will state that (1) a GCC supranational monetary institution is required in order to conduct a singular monetary, as well as the exchange rate policy geared towards economic, financial and monetary conditions within the monetary union; (2) Qatar, as well as the other GCC state members, have already achieved an incredible degree of monetary union, but fiscal union still remains its…
3 pages (753 words)