A paper "Central Bank and Monetary Policy" reports that a modern central bank also provides a range of services to commercial banks. In this regard, it is the bankers’ bank. But the main reason why countries create their own central banks is to ensure control of their currency…
The main reason why countries create their own central banks is to ensure control of their currency. The central bank is the only authority that can print money and such responsibility cannot be given to anyone else as the consequence may turn out to be disastrous. The role of the central bank evolved over time and the literature in monetary theory points out that central banks work to reduce the impact of economic fluctuations and to minimize volatility in the financial system. They pursue five objectives to ensure economic and financial stability. The goals of central banks are generally specified as price stability, stable real growth, financial stability, interest rate and exchange rate stability (Mankiw, 2011; Geraats, 2006, pp. 37-40). The main goal of this research project is to help understand how the central bank manages and controls the quantity of money in the economy and its relation to price stability. It also brings out the main tasks of central banks and the challenge they face in conducting monetary policy. Objectives of Central Bank: The major role of the central bank of any country in the world is to monitor the financial structure of the respective country. Central banks also control the volume of financial transactions which are made by all other banks in the economy. These other banks include commercial banks, other non-banking financial institutions. The most important objective of the central bank is to manage the amount of financial resources of the economy and thus to maintain the stability in the economy. This stability is maintained in the economy by the central bank of the country in respect to stability of prices of goods and services, stability of financial transactions and prices of these transactions. Also stability is required to be achieved by the central bank in terms of movements in nominal as well as real interest rates and stability in exchange rates. Finally, the most important role of the central bank is to maintain stability in the real growth of the economy (Mankiw, 2011). Central banks of different countries have long been correlated with secrecy. Even in regard to the present trend toward higher level of transparency of different monetary policies, it can be said that, this has not dispersed the inscrutability with which all central bankers often argue. Various researchers have provided an economic explanation for different roles of oblique communication. Under the conceivable assumption that there exists imperfect common knowledge or information about the level of transparency, all economic outcomes have been decided by both actual as well as perceived transparency. It has been shown, in numerous researchers, that it can be helpful to merge actual transparency with the perceived opacity. The optimal or most efficient communication strategy for the central bank is related to the process of providing clarity about the target level of inflation. But the role of the central is also related to the process of providing information with recognized ambiguity about the target of prevailing as well as expected output-gap and supply shocks. Therefore, “the central bank benefits from sustaining transparency misperceptions, which helps to explain why transparency of monetary policy has not eliminated the mystique of central bank speak” (Geraats, 2006, p. 38; Blanchard, 2007, pp. 69-75). Balance sheet of central bank: The balance sheet of the central consists of assets and liabilities. ...
Cite this document
(“Central Bank and Monetary Policy Research Paper”, n.d.)
Retrieved from https://studentshare.net/macro-microeconomics/7914-central-bank-and-monetary-policy
(Central Bank and Monetary Policy Research Paper)
“Central Bank and Monetary Policy Research Paper”, n.d. https://studentshare.net/macro-microeconomics/7914-central-bank-and-monetary-policy.
This article reviews and analyzes Shigeyuki Hamori’s and Naoko Hamori’s book, “Introduction of the Euro and the Monetary Policy of the European Central Bank”. Shigeyuki Hamori is a professor and lecturer at the Japan’s Kobe University Graduate School, Faculty of Economics.
Since the time of King William of Orange, central banks around the world have become influential and important for functioning of the economy and countrywide security and welfare. As importance of the government for the welfare of all citizens increased, so did the central bank’s importance (Cechetti & Schoenholtz, 2011, Chapter 15).
As the new roles of central banks changed into agencies of public policy, there were underlying objectives that were infrequently stated. In the context it is used, an individual can conclude that objective that underlie all functions for the interest of the economy, is consistent with economic policy of the government.
The central bank can be identified as an institution whose main task is to manage the currency of a country, its money supply as well as its interest rates. The central bank of any particular country is also responsible to look after the commercial banking system.
Central banks are also normally concerned with currency, collection, as they are the bank of the government. They control the credit structure, supervise commercial banks, deal with exchange funds and operate as a lender of previous alternative. 1. Discuss briefly the five objectives of central banks.
This essay focuses on the provision of the comprehensive analysis of the monetary situation in the UK economy and determination of the desired monetary policy changes on the part of the Bank of England. It is shown in the essay, that BoE need to gradually increase its interest rates while at the same time allowing lowering of expected inflation.
Theoretical Underpinnings for Central Bank Independence 7 2.4. Empirical Support for Central Bank Independence 7 2.5. Inflation & Central Bank Independence 8 3. Conclusion 9 4. References 10 5. Bibliography 12 1. Introduction Independence of the Central bank implies that the monetary policymakers are free from direct influence from the government or from the political front while conducting the policies.
This paper analyses the structure of the proposed central bank for GCC, its objectives and functions as well as why the implementation has been retarded. Introduction Economic structures of countries in the GCC region are similar as most of them have their GDP majorly influenced by natural minerals and more so hydrocarbon sectors.
overed in the gamut are structure for the new bank, point of similarities and dissimilarities with the ECB, arguments in favor of and against of the formation of the new central bank and the objectives to be followed by the proposed central bank.
Since long countries in the GCC
Researcher contrasted the UK financial scenario during the post 2008 recessional period. Moreover, different factors like the redundancy, credit market fluctuations and inflation of cost. On the contrary, currency exchange rates will be imposed on the trading operations. In the study, researcher has emphasised on the collective demand of the currency exchange rate in the UK.
5 Pages(1250 words)Case Study
GOT A TRICKY QUESTION? RECEIVE AN ANSWER FROM STUDENTS LIKE YOU!
Let us find you another Research Paper on topic Central Bank and Monetary Policy for FREE!