It issues Federal Reserve Notes, clears checks, acts as a fiscal agent to the federal government, and audits and maintains competition in the banking system. ... The first unconventional monetary policy tool was the fixed-rate full-allotment policy (FRFA). ... One example is the currency swap agreement between the ECB and the Federal Reserve, which made it easy for the ECB to solve bank's liquidity problems using foreign currencies; they also swapped euros for Swiss francs and British pounds. ... The Bank of Japan underwent several policy measures to ensure stability in financial markets...

• Word Count: 3183
• Approx Pages: 13
• Has Bibliography
• Grade Level: Undergraduate

Is it more cost effective during a fiscal trough to lower interest rates dramatically and increase governmental spending? ... For example, as the short run is key we can evaluate the actions the US FED took after the collapse of the sub-prime mortgage market. ... While advocates of Keynesian economics will argue that private sector decisions sometimes lead to inefficient macroeconomic outcomes, monetary policy actions by a central bank and fiscal policy actions by the government are needed to stabilize output over the business cycle. ... What all of these examples illustrate is that the privat...

• Word Count: 663
• Approx Pages: 3
• Grade Level: Undergraduate

Monetary Policy and the Economy Using the tools of monetary policy, the Federal Reserve can affect the volume of money and credit and their price "interest rates. ... GOALS OF MONETARY POLICY Many analysts believe that the central bank should focus primarily on achieving price stability. ... For example, in the long run, price stability complements efforts to achieve maximum output and employment; but in the short run, some tension can arise between efforts to reduce inflation and efforts to maximize employment and output. ... MONETARY POLICY AND THE RESERVES MARKET The initial link betwe...

• Word Count: 4049
• Approx Pages: 16
• Grade Level: Undergraduate

For example the Bundesbank in Germany has full independence. ... For example the Bank of England has partial independence, in that it has instrument control but not objective power. ... The importance of credibility to the monetary policy was realised in the mid 1980s. ... An example of high TOR is Argentina, where the actual average term of office of the governor of the central bank amounts to only ten months during the 1980s. This example suggests that the TOR of central bank governors may be a good indicator for the degree of central bank autonomy. ...

• Word Count: 4086
• Approx Pages: 16
• Grade Level: Undergraduate

Otherwise these policies destabilising capital flows would inevitably undermine the exchange rate. ... According to this view, an exchange rate anchor was particularly effective in countries with high inflation say, high two digits levels that had already tackled (most of) their fiscal imbalances. ... For example, an investor wishing to invest in a foreign country where such a deposit was in operation would find himself obliged to pay out an additional (say) 20%, which he would deposit with the central bank for a period of (say) one year. ... Recent regulatory changes have removed the protecti...

• Word Count: 2133
• Approx Pages: 9
• Has Bibliography
• Grade Level: Undergraduate

Therefore, this paper will clearly clarify these issues, and positive effects on the economy in the ways of dollarization performs variable and vital tasks in the world and examines Cambodia's economy as an example to be specified economically. ... The downside of dollarization is that the country gives up its right to influence its own monetary policy by adjusting the money supply.... This suggestion is exerted by then-president Carlos Menem of Argentina in 1999, is to rescue difficulties with monetary and exchange rate policy as an efficient solution to its long history issues. ...

• Word Count: 3668
• Approx Pages: 15
• Has Bibliography
• Grade Level: Undergraduate

Relative economic performance was beginning to deteriorate. but a strong gold price shielded policy makers from this reality. ... If handled well and in a fiscally responsible manner, the programme will go some way towards meeting expectations and providing a necessary stimulus to growth. ... The longer-term policy objective is to bring South Africa's inflation rate down to the same level as that of its trading partners. Since 1989 good progress has been made in combating inflation through restrictive monetary policies. ... This was due to the natural modernisation of the economy, a...

• Word Count: 6046
• Approx Pages: 24
• Grade Level: Undergraduate