What is an administrative monetary policy?

Monetary policy examples

All the members of the Monetary Board shall have substitutes, except for the President, who shall be substituted by the Vice President, and the Ministers of State, who shall be substituted by their respective Vice Ministers.

HONDURASArticle 342.- The monetary issue is the exclusive power of the State, which shall exercise it through the Central Bank of Honduras. The banking, monetary and credit regime shall be regulated by law. The State, through the Central Bank of Honduras, shall be responsible for the formulation and development of the monetary, credit and exchange policy of the country, duly coordinated with the planned economic policy.

Article 343.- The Central Bank of Honduras shall regulate and approve the granting of loans, discounts, guarantees and other credit operations; commissions, gratuities or bonuses of any kind that banking, financial and insurance institutions grant to their majority shareholders, directors and officials. Any violation of the provisions of this article shall be sanctioned in accordance with the regulations issued by the Central Bank, without prejudice to any civil or criminal liability action that may be applicable.

What is monetary policy and examples?

Monetary policy is an economic policy that uses the quantity of money as a control variable to ensure and maintain economic stability. To this end, the monetary authorities use mechanisms such as interest rate variation and participate in the money market.

What is monetary policy?

Monetary policy refers to the set of decisions that monetary authorities take in order to seek stability in the value of money and avoid permanent imbalances in the balance of payments, and to influence interest rates and inflation.

What are the types of monetary policy?

Types of monetary policy

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Monetary policy can be divided into expansionary policy and restrictive policy. Monetary policy can be either expansionary or restrictive.

Expansionary monetary policy

2017-22 Disjunct between price stability and financial stability objectives: determinants of coordination gains between monetary and macroprudential policy (Available in English only).

Description: This paper studies the disjuncture that can arise between the objectives of the inflation targeting and financial stability scheme. We use a simple conceptual framework to conduct macroeconomic policy analysis under three strategies: (1) a base case in which monetary policy pursues traditional price stability objectives; (2) a monetary policy that “leans against the wind”; and (3) a case of coordination between monetary and macroprudential policy instruments. It is found that, under certain circumstances, having financial stability objectives as an additional macroeconomic policy can increase inflation volatility. We also identify cases in which the costs in terms of macroeconomic volatility between policy objectives create room for improvements when monetary and macroprudential policies are coordinated. These improvements are generally greater when financial shocks are the main source of macroeconomic fluctuations.

What is the objective of monetary policy?

The primary objective of monetary policy is to achieve and maintain a low and stable inflation rate, and to ensure that output grows around its long-term trend. This is the only way to achieve sustained growth that generates employment and improves the population’s standard of living.

What is expansionary monetary policy examples?

The purchase of public debt or, in other words, the injection of money into the country. Buying government bonds or other types of financial assets and paying private agents, who can reinvest these amounts in the market.

What are the characteristics of monetary policy?

Characteristics of expansionary monetary policy

Its main objective is to increase the money supply to stimulate the economy. Seeks to stimulate aggregate demand. It reduces interest rates. Places more money in circulation to stimulate consumption.

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Types of monetary policy

The first, of course, is the financing of the health system, understanding that the priority in this crisis is to increase hospital coverage, massify diagnostic tests and have the necessary supplements. This is even more important in countries with widespread poverty such as ours.

Ben Bernanke, chairman of the Federal Reserve between 2006 and 2014, said it well: “Making politically unpopular decisions for the long-term benefit of the country is why the Federal Reserve is an independent central bank. It was created precisely for that purpose: to do what needs to be done, what others are unwilling or unable to do.”

And indeed, the Fed has not hesitated to adopt broadly unorthodox measures in the face of a crisis that in just three weeks put nearly 16 million people out of work. These measures include the capitalization of stabilization and guarantee funds, direct liquidity provided to corporate bond markets, special loans to large employers and special lines for federal states and municipal governments.

What is the monetary policy in Peru?

Monetary policy is a part of economic policy, which is the responsibility of the Central Reserve Bank (BCRP), an autonomous and independent entity of the central government. … In other words, the BCR announces the inflation target and thereby anchors the expectations of economic agents (companies and households).

Who defines a country’s monetary policy?

The Governing Council of the European Central Bank (ECB), in which the governors of the national central banks of the euro zone countries participate, is responsible for defining and implementing monetary policy for the entire area and its objective is to maintain price stability.

Who conducts monetary policy?

Monetary policy decisions made by Banco de México (Banxico) are focused on guaranteeing the peso’s purchasing power by controlling inflation and monitoring the exchange rate.

Monetary policy pdf

Monetary policy or financial policy is a branch of economic policy that uses the quantity of money as a variable to control and maintain economic stability. It comprises the decisions of the monetary authorities concerning the money market, which change the quantity of money or the interest rate. When applied to increase the quantity of money, it is called expansionary monetary policy – quantitative easing – and when applied to reduce it, restrictive monetary policy.

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The choice of the intermediate mechanism to be used depends on its ease of use, the amount of information available on each measure, and the final objective to be achieved. A good candidate is the interest rate, since it is known on the spot, while determining the quantity of money takes a few days.

By varying the discount rate, which is the interest rate on loans granted by the central bank to commercial banks. A bank borrows from the central bank when it has a lower amount of reserves than it needs, either because it has lent too much or because it has experienced recent withdrawals. When the central bank lends to a bank, the banking system has more reserves and these additional reserves allow it to create more money.