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  3. What monetary policy tools can a government use to control money supply?

What monetary policy tools can a government use to control money supply?

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问题 What monetary policy tools can a government use to control money supply?
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答案A central bank can use the following monetary policy tools to affect intermediate targets and to achieve the ultimate objectives of monetary policy—the best combination of low inflation, low unemployments, rapid GDP growth, and orderly financial markets. Open-market operations: Sales by the central bank of government securities in the open market reduce money supply by lowering hank reserves. Open-market purchases do the opposite, ultimately expanding money supply by increasing bank reserves. Discount rate policy: A central bank can also raise or lower the discount rate, which is the interest rate charged on bank borrowings from the central bank, to decrease or increase money supply. Reserve requirements: The central bank might require all institutions in the monetary sector with eligible liabilities in the non-operational, non-interest-bearing deposits with the central bank. Changing the level and/or structure of interest rates: The government’s influence over interest rates can be achieved through open-market operations or through the interest rate imposed by the central bank. However, it is now accepted that the interest rate weapon is more suitably used to control inflation or the exchange rate rather than to control broad money supply growth. Direct controls over bank lending: Quantitative controls might be imposed on the growth in volume of either bank lending (i, e. assets) or bank deposits. Qualitative controls may be used to influence the type of bank lending, e.g. favouring the business sector as against the personal sector. Special deposits: The central bank may require the commercial banks to lodge non-operational special deposits to reinforce its control over credit. This weapon, which is not often used, can be a sharp and effective means of affecting interest rates.
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中级（经济学）

原金融专业英语（FECT）

金融英语（FECT）

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