Topic 1 Central Banking Law
Topic 1: Central Banking Law 1
Core purposes of the CB a Core purposes 1 -Monetary Stability Core purposes 2- Financial Stability http://w.bankofengland.co.uklabout/pag es/corepurposes/default. aspX http://w.federalreserve.govi http://www.ecb.int/home/html/index.en.hti
Core purposes of the CB Core purposes 1 -Monetary Stability. Core purposes 2- Financial Stability http://www.bankofengland.co.uk/about/Pag es/corepurposes/default.aspx http://www.federalreserve.gov/ http://www.ecb.int/home/html/index.en.html 2
Monetary Policy a Monetary policy consists basically of three elements objectives of monetary policy, instruments of monetary policy and organization for formulating and implementing monetary policy
Monetary Policy Monetary policy consists basically of three elements: objectives of monetary policy, instruments of monetary policy and organization for formulating and implementing monetary policy. 3
TA Objectives of Monetary Policy Under the Bank of England Act, the monetary policy objectives of the Bank of England are to maintain price stability, and subject to that, to support the economic policy of the Government, including its objectives for growth and employment Under the federal reserve act the board of governors and the federal open Market Committee should seek to promote effectively the goals of maximum employment, stable prices, and moderate ong-term interest rates
A. Objectives of Monetary Policy Under the Bank of England Act, the monetary policy objectives of the Bank of England are to maintain price stability, and subject to that, to support the economic policy of the Government, including its objectives for growth and employment. Under the Federal Reserve Act, the Board of Governors and the Federal Open Market Committee should seek “to promote effectively the goals of maximum employment, stable prices, and moderate long-term interest rates.” 4
To be continued °“the2003 PBOC Law states that the objectives of monetary policy are to maintain monetary stability, and in this way promote economic growth Why is monetary stability a primary objective while economic growth is a secondary one? to avoid the time inconsistency problem 5
To be continued the 2003 PBOC Law states that the objectives of monetary policy are to maintain monetary stability, and in this way promote economic growth. Why is monetary stability a primary objective while economic growth is a secondary one? --to avoid the time inconsistency problem 5