Introduction to monetary policy:
Introduction to monetary policy Monetary policy is the policy, which concerned with the measures taken to regulate the volume of credit, created by bank. Monetary policy is also known as-EXPANSIONARY or CONTRACTIONARY POLICY Monetary policy is contrasted with fiscal policy, which refers to government borrowing, spending and taxation.
Elements of monetary policy:
Elements of monetary policy To regulate the stock & growth rate of money. To regulate the stock & growth rate of near money. To regulate level & structure of money. To control exchange rate.
Objective of monetary policy:
Objective of monetary policy Price stability Economic growth Controlled expansion of quantity of money To promote saving & expansion To control business cycle To promote export or imports substituted To regulate money supply To provide infrastructure
Techniques of Monitary policy:
Techniques of Monitary policy Quantitative technique Qualitative technique
Quantitative technique:
Quantitative technique Bank rate Statuatory liquidity ratio Multiple rate of interest Open market operation Cash reserve ratio
Qualitative control:
Qualitative control Selective credit control Rashioning of credit Morale persuation Credit authorization scheme(CAS) Direct action
Advantages of monetary policies:
Advantages of monetary policies Active policy Control money supply Seasonal variation Flexible Investment & saving oriented
Limitation of monitary policy:
Limitation of monitary policy Restricted scope of monitary policy Lack of co-ordination between monitary & fiscal policy Unfavourable banking habits Black money Conflicting objectives
Thank you:
Thank you