Académique Documents
Professionnel Documents
Culture Documents
cisi.org
Monetary or Fiscal Policy?
cisi.org
Monetary and Fiscal Policy
cisi.org
Activities: Activities: Activities:
Provides credit cards for Advise businesses wanting to Provides a depositors’ protection
customers borrow money in bond scheme
markets (debt)
Provides personal loans for Issues notes and coins
customers Advise businesses wanting to
issue shares (equity) Acts as a banker to the banking
Currency exchange for system i.e. Commercial banks
people travelling Advise businesses on strategy Acts as a banker to the
and growth (Mergers and government
Mortgage lending for people acquisitions) Regulates the domestic banking
to buy homes system
Advise businesses on strategy
and growth (Mergers and Holds the nation’s gold and
Provides savings and current
acquisitions) money supply
accounts for individuals
Arranges overdraft facilities Buy and sell financial assets to Influences the value of a nation’s
for customer accounts make a profit currency
cisi.org
Central Banks – The Bank of England (BoE)
Background
• Founded in 1694
• It does NOT :
• manage the National Debt (This is the Debt Management Office in the UK)
• provide a depositors protection scheme (This is the Financial Service
Compensation Scheme in the UK)
cisi.org
Central Banks – The Bank of England
Strategic Priorities
When interest rates cannot be lowered any further, central banks must use alternatives.
FOMC
7 members Chairman
appointed by the US Appointed
7 members of the
President by the US
Board of Governors President
Acts as
lender of last The Fed (1913)
resort to US FEDERAL OPEN MARKET COMMITTEE (FOMC)
banking Promotes price stability and economic growth
system Meets every 6-weeks – economic health?
This can help Should the Fed funds rate be altered?
stop Emergency session required?
‘Contagion’
2015 – Fed raises interest rates for the first time
since the 2008 Financial Crisis
Each of the 12
banks
monitors the 5 Presidents from
activities and 12 Federal Reserve Banks the 12 Federal
provides Reserve Banks
liquidity to the
regional Regional Banks in the USA
banks they
are
responsible for cisi.org
Central Banks – European Central Bank (ECB)
ECB SETS THE MONETARY POLICY FOR THE EUROZONE:
• Maintain internal price stability
• Keep Harmonised Index of Consumer Prices (HICP) ‘close to but below 2% in
the medium term’.
• Influences external value of the euro and growth in the money supply.
ECB • 2014 - The Single Supervisory Mechanism (SSM) framework was established. The
(01.01.99) ECB and national supervisory authorities supervises and monitors the financial
stability of banks in the Eurozone – a milestone towards banking union within the
EU