Monetary Policy of Bangladesh
Monetary Police
Monetary policy is the term used by economists to describe ways of managing the supply of money in an economy. Monetary Policy is the management of money supply and interest rates by central bank to influence prices and employment for achieving the objectives of general economic policy. Monetary policy works through expansion or contraction of investment and consumption expenditure.
According to Paul Einzig
“Monetary policy includes all monetary decisions and measures irrespective of whether their aims are monetary and non-monetary, and all non-monetary decisions and measures that aim it affecting the monetary system.”
According to Harry G. Johnson
“Monetary policy employing the central bank’s control of supply of money as an instrument for achieving the objectives of general economic policy.”
According to G.K. Shaw
“By monetary policy we mean any conscious action undertaken by the monetary authorities, to exchange the quantity, or cost (interest rate) of money.”
From the above discussion monetary policy may be defined as the central bank’s policy pertaining to the control of the availability, cost and use of money and credit with the help of monetary measures in order to achieve specific goals.
The Importance of Monetary Rule
There is a difference in between “pegged” and “fixed” rates, which lies in the adjustment system. A fixed exchange rate is the monetary rule that contains an equilibrating mechanism of the balance of payments. The gold standard was a good example of fixed rates. Countries defined their currencies in terms of weights of gold and exchange rates represented the ratios of the weights. This system got into trouble very rarely, as during war, countries turned to finance deficit etc. Success of gold depends on fiscal prudence. A country fixes the exchange rate between its currency and an important foreign currency. A currency board works automatically to preserve equilibrium in the balance of payments. Some
Monetary policy is the term used by economists to describe ways of managing the supply of money in an economy. Monetary Policy is the management of money supply and interest rates by central bank to influence prices and employment for achieving the objectives of general economic policy. Monetary policy works through expansion or contraction of investment and consumption expenditure.
According to Paul Einzig
“Monetary policy includes all monetary decisions and measures irrespective of whether their aims are monetary and non-monetary, and all non-monetary decisions and measures that aim it affecting the monetary system.”
According to Harry G. Johnson
“Monetary policy employing the central bank’s control of supply of money as an instrument for achieving the objectives of general economic policy.”
According to G.K. Shaw
“By monetary policy we mean any conscious action undertaken by the monetary authorities, to exchange the quantity, or cost (interest rate) of money.”
From the above discussion monetary policy may be defined as the central bank’s policy pertaining to the control of the availability, cost and use of money and credit with the help of monetary measures in order to achieve specific goals.
The Importance of Monetary Rule
There is a difference in between “pegged” and “fixed” rates, which lies in the adjustment system. A fixed exchange rate is the monetary rule that contains an equilibrating mechanism of the balance of payments. The gold standard was a good example of fixed rates. Countries defined their currencies in terms of weights of gold and exchange rates represented the ratios of the weights. This system got into trouble very rarely, as during war, countries turned to finance deficit etc. Success of gold depends on fiscal prudence. A country fixes the exchange rate between its currency and an important foreign currency. A currency board works automatically to preserve equilibrium in the balance of payments. Some