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The conduct of monetary policy
6/17/2015 12:02:00 PM
The most important objectives of monetary policy is to achieve some kind of economic stability in light of balanced growth, meaning that there is a correlation between economic activity and the cash and it shows clearly through the link jobless economic problems and inflation and devaluation of national currency cash solutions and can thus monetary policy if available, its favorable economic conditions to achieve the kind of internal stability, monetary policy has been used a tools to absorb excess purchasing power in the market of goods and services and through the polarization of this surplus in the form of savings, as well as the post of monetary policy to influence the national currency exchange to the extent price which reduces the severity of the deficit in the balance of payments and thus monetary policy is one of the general economic policy, which used to contain inflation and protect the national currency of deterioration tools, and to achieve the existing economic expansion on the basis of funding for the various productive activities so that the state controls the balance between the cash price and the price of goods. And attention to the role of monetary policy has begun to achieve economic growth and after World War II, where he was interest before that the goal of achieving full employment, and the role of monetary policy is to achieve a high rate of savings and the impact on the rate of investment through credit expansion, so that it can access to the start-up phase, which put their economies on the road to self-rapid growth. And you can use monetary policy to raise the level of economic growth by reducing interest rates, which encourages investors to increase their investments and thus employ more labor and increase incomes in the end, any raise living standards and growth.
The goal of monetary policy is to achieve a real growth away from inflation and balance in external payments and distribution of the resources of the community. And the foundations of monetary policy differ from country to country, depending on levels of progress and development in the economic and social systems of different societies. For example, in advanced industrial capitalist countries is concentrated these policies primarily to maintain full operation of the economy for internal monetary stability in order to meet the various economic fluctuations, these countries are pursuing some monetary policy quantitative open as the market or interest rate adjustment or change the reserve ratio at banks, however, monetary policy is not sufficient, to achieve all the goals. Monetary policy practiced financial effects directly or non Mbacharfi developed countries, but they do not play the same role in financing and investment aspects in underdeveloped countries because of the failure of the banking system and the failure of the banking awareness among individuals and the lack of market for cash in the true sense, but nevertheless, the impact would seem the result of Governments Many of the projects funded by the budget deficit and increase the cash version any amount of money to play an important role in those terms. That the exchange rate depreciation is working to improve the balance of payments, and the exchange rate stability is a guarantee of the stability of the country outward. That is why some countries are working on linking its currency strong in convertible currencies and concern for the stability of its currency against those currencies, leading to an inability to control and control of this goal, forcing monetary authorities to intervene to influence the exchange rate and the use of its reserves to try them maintain the value of its currency, the direction of currencies to which they relate, without a guarantee of success and the cost of return for selecting target exchange rate stability.
To increase the volume of money in circulation in individuals increases spending on various buy more goods and services, which pays producers to meet this demand by producing more goods and services, that is, that the high amount of money in circulation leads to stimulate the economy. However, the excessive increase in the volume of money in circulation will lead to total output is unable to meet the total demand and then falling into the problem of inflation. The reduction of the volume of money below the required level leads to a decline in aggregate demand, and the consequent recession in economic activity, meaning that there is a direct correlation between the volume of money in circulation and the general level of prices.
Central Bank plays a key role in maintaining economic stability and supporting the economic growth in the state in terms of a range of issues including, money version of Banknotes and metal as needed economy, monetary policy management in the economy using monetary policy tools.
The achievement of monetary stability of the priorities of the monetary policy of the Central Bank of any country, and is monetary stability elements which the central bank aims to achieve in the stability of the general price level, and the stability of the national currency exchange and create a structure of interest rates price in line with local economic conditions and international developments. The central bank seeks to achieve this through the organization of domestic liquidity growth in the national economy, commensurate with the finance and real economic activity. And achieve monetary stability is the main pillar of monetary policy at the moment. If the central bank wanted to limit the size of bank credit have resorted to raising the rediscount rate, where this leads to raise the interest rate, which commercial banks borrow, but if the central bank lowers the rediscount rate so it encourages commercial banks in turn to cut the discount rate, which Individuals were encouraged consumers or investors a discount of commercial papers and thus enable them to expand sales operations Balogel.ovi inflation cases of bank raises rediscount rate to limit the ability of banks to credit expansion is done on the cost of credit and the cost of funding has been, it shall be paid to investors refrain for borrowing and may resort to invest their money in the financial market, and thus the funds come out of a liquidity trap, Viqls money supply and Enkmh.o size in the case of an expansionary policy, it is to cut the rediscount rate so that commercial banks at a discount of its commercial paper and in the granting of credit expansion. The question many economists in the extent of the efficacy and effectiveness of this tool in achieving contractionary or expansionary goals, especially in light of the diversity of funding sources, and the abandonment of the gold standard system and the free flow of capital to and from the states, and this tool is not only the index for commercial banks is in the direction of monetary authorities regarding credit policy.
Is determined by the effectiveness of government equity in bringing about the desired changes how the profitability of the government, which is trading its shares on the market projects, and in fact, the government, which derive from specific projects are considered too bulky, because of the diversity of those investments, they do not invest in a single project or in one activity, as profits The State projects-efficient management due to the possession of the most efficient tires march, and this is what makes the average profit the government share comparable to the average profit of the national economy that is the possibility of loss of and behind the possession of a government share is very weak, and this is a demand for the government's shares is greater than the demand for sector shares private, and that's what makes the use of these shares as a tool to control money supply.
The role of monetary policy in reducing the deficit in the balance of payments protrudes through the central banks using the tool of monetary policy tools which raise the discount rate, because it will make commercial banks raise interest rates and if increased the demand for credit or request will fall, which will make prices tend to decline also, because the demand has decreased on the items, and if prices fell locally, this procedure will lead to the promotion of exports, and to reduce the demand for foreign goods as long as the domestic prices low, and the high interest rates locally will lure foreign individuals to invest their money national banks, and thus the flow of foreign funds into the country, and this is what contributes to the reduction of the deficit in the balance of payments, and with low domestic price inflation rate is reduced, which makes domestic goods more able to compete with foreign goods, as it encourages increased exports, and reduce the deficit in the balance of payments. That is what happened in the aftermath of the 1980 elections in the United States when he was a high interest rate of inflation, and the dollar rose for the major currencies during the same year. Monetary policy include the serial goals and beginning the initial objectives such as the goal of the monetary base, interest rates and precautions free, and there are intermediate targets between initial and final goals, such as medium and long-term aggregates cash all interest rates, the total credit, the national GDP, and the nominal exchange rate. The ultimate goals that shape under the general economic policy is, to stabilize the general level of prices and full employment, and to achieve a high rate of growth and balance of payments equilibrium.
Monetary exchange rate gives an important indicator on the economic situation of any state, and should be maintained on the exchange acceptable rate even be close to the level of the PPP capacity, and can monetary policy be a contribution to the economic balance through its intervention in order to raise the exchange rate against other currencies rate, and may be warrior of inflation, which achieves the ultimate goal of monetary policy, and when the exchange rate taken as an intermediate target it many defects appear, because the foreign exchange markets is not systematic, it is exposed to the vagaries of, and rate of exchange plays an important role in the knowledge of economic and financial strategy of any government.
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6/17/2015 12:02:00 PM
The most important objectives of monetary policy is to achieve some kind of economic stability in light of balanced growth, meaning that there is a correlation between economic activity and the cash and it shows clearly through the link jobless economic problems and inflation and devaluation of national currency cash solutions and can thus monetary policy if available, its favorable economic conditions to achieve the kind of internal stability, monetary policy has been used a tools to absorb excess purchasing power in the market of goods and services and through the polarization of this surplus in the form of savings, as well as the post of monetary policy to influence the national currency exchange to the extent price which reduces the severity of the deficit in the balance of payments and thus monetary policy is one of the general economic policy, which used to contain inflation and protect the national currency of deterioration tools, and to achieve the existing economic expansion on the basis of funding for the various productive activities so that the state controls the balance between the cash price and the price of goods. And attention to the role of monetary policy has begun to achieve economic growth and after World War II, where he was interest before that the goal of achieving full employment, and the role of monetary policy is to achieve a high rate of savings and the impact on the rate of investment through credit expansion, so that it can access to the start-up phase, which put their economies on the road to self-rapid growth. And you can use monetary policy to raise the level of economic growth by reducing interest rates, which encourages investors to increase their investments and thus employ more labor and increase incomes in the end, any raise living standards and growth.
The goal of monetary policy is to achieve a real growth away from inflation and balance in external payments and distribution of the resources of the community. And the foundations of monetary policy differ from country to country, depending on levels of progress and development in the economic and social systems of different societies. For example, in advanced industrial capitalist countries is concentrated these policies primarily to maintain full operation of the economy for internal monetary stability in order to meet the various economic fluctuations, these countries are pursuing some monetary policy quantitative open as the market or interest rate adjustment or change the reserve ratio at banks, however, monetary policy is not sufficient, to achieve all the goals. Monetary policy practiced financial effects directly or non Mbacharfi developed countries, but they do not play the same role in financing and investment aspects in underdeveloped countries because of the failure of the banking system and the failure of the banking awareness among individuals and the lack of market for cash in the true sense, but nevertheless, the impact would seem the result of Governments Many of the projects funded by the budget deficit and increase the cash version any amount of money to play an important role in those terms. That the exchange rate depreciation is working to improve the balance of payments, and the exchange rate stability is a guarantee of the stability of the country outward. That is why some countries are working on linking its currency strong in convertible currencies and concern for the stability of its currency against those currencies, leading to an inability to control and control of this goal, forcing monetary authorities to intervene to influence the exchange rate and the use of its reserves to try them maintain the value of its currency, the direction of currencies to which they relate, without a guarantee of success and the cost of return for selecting target exchange rate stability.
To increase the volume of money in circulation in individuals increases spending on various buy more goods and services, which pays producers to meet this demand by producing more goods and services, that is, that the high amount of money in circulation leads to stimulate the economy. However, the excessive increase in the volume of money in circulation will lead to total output is unable to meet the total demand and then falling into the problem of inflation. The reduction of the volume of money below the required level leads to a decline in aggregate demand, and the consequent recession in economic activity, meaning that there is a direct correlation between the volume of money in circulation and the general level of prices.
Central Bank plays a key role in maintaining economic stability and supporting the economic growth in the state in terms of a range of issues including, money version of Banknotes and metal as needed economy, monetary policy management in the economy using monetary policy tools.
The achievement of monetary stability of the priorities of the monetary policy of the Central Bank of any country, and is monetary stability elements which the central bank aims to achieve in the stability of the general price level, and the stability of the national currency exchange and create a structure of interest rates price in line with local economic conditions and international developments. The central bank seeks to achieve this through the organization of domestic liquidity growth in the national economy, commensurate with the finance and real economic activity. And achieve monetary stability is the main pillar of monetary policy at the moment. If the central bank wanted to limit the size of bank credit have resorted to raising the rediscount rate, where this leads to raise the interest rate, which commercial banks borrow, but if the central bank lowers the rediscount rate so it encourages commercial banks in turn to cut the discount rate, which Individuals were encouraged consumers or investors a discount of commercial papers and thus enable them to expand sales operations Balogel.ovi inflation cases of bank raises rediscount rate to limit the ability of banks to credit expansion is done on the cost of credit and the cost of funding has been, it shall be paid to investors refrain for borrowing and may resort to invest their money in the financial market, and thus the funds come out of a liquidity trap, Viqls money supply and Enkmh.o size in the case of an expansionary policy, it is to cut the rediscount rate so that commercial banks at a discount of its commercial paper and in the granting of credit expansion. The question many economists in the extent of the efficacy and effectiveness of this tool in achieving contractionary or expansionary goals, especially in light of the diversity of funding sources, and the abandonment of the gold standard system and the free flow of capital to and from the states, and this tool is not only the index for commercial banks is in the direction of monetary authorities regarding credit policy.
Is determined by the effectiveness of government equity in bringing about the desired changes how the profitability of the government, which is trading its shares on the market projects, and in fact, the government, which derive from specific projects are considered too bulky, because of the diversity of those investments, they do not invest in a single project or in one activity, as profits The State projects-efficient management due to the possession of the most efficient tires march, and this is what makes the average profit the government share comparable to the average profit of the national economy that is the possibility of loss of and behind the possession of a government share is very weak, and this is a demand for the government's shares is greater than the demand for sector shares private, and that's what makes the use of these shares as a tool to control money supply.
The role of monetary policy in reducing the deficit in the balance of payments protrudes through the central banks using the tool of monetary policy tools which raise the discount rate, because it will make commercial banks raise interest rates and if increased the demand for credit or request will fall, which will make prices tend to decline also, because the demand has decreased on the items, and if prices fell locally, this procedure will lead to the promotion of exports, and to reduce the demand for foreign goods as long as the domestic prices low, and the high interest rates locally will lure foreign individuals to invest their money national banks, and thus the flow of foreign funds into the country, and this is what contributes to the reduction of the deficit in the balance of payments, and with low domestic price inflation rate is reduced, which makes domestic goods more able to compete with foreign goods, as it encourages increased exports, and reduce the deficit in the balance of payments. That is what happened in the aftermath of the 1980 elections in the United States when he was a high interest rate of inflation, and the dollar rose for the major currencies during the same year. Monetary policy include the serial goals and beginning the initial objectives such as the goal of the monetary base, interest rates and precautions free, and there are intermediate targets between initial and final goals, such as medium and long-term aggregates cash all interest rates, the total credit, the national GDP, and the nominal exchange rate. The ultimate goals that shape under the general economic policy is, to stabilize the general level of prices and full employment, and to achieve a high rate of growth and balance of payments equilibrium.
Monetary exchange rate gives an important indicator on the economic situation of any state, and should be maintained on the exchange acceptable rate even be close to the level of the PPP capacity, and can monetary policy be a contribution to the economic balance through its intervention in order to raise the exchange rate against other currencies rate, and may be warrior of inflation, which achieves the ultimate goal of monetary policy, and when the exchange rate taken as an intermediate target it many defects appear, because the foreign exchange markets is not systematic, it is exposed to the vagaries of, and rate of exchange plays an important role in the knowledge of economic and financial strategy of any government.
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