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MONETARY POLICY Role of Central Banlk PART 2 BY AYUSSH SANGHI
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FUNCTIONS OF CENTRAL BANIK k Custody and Management of Foreign Exchange Reserves. k Acting as a Bank to the Banker Acting as a Banker to the Government Central Bank as the Lender of the Last Resort Central Bank as the Controller of Credit
Central Bank as the Controller of Credit The central bank of a country exercises discretionary control over the monetary system of the country. * The central bank of a country exercises discretionary It commands an important position in the monetary and banking structure of the country
Central Bank as the Controller of Credit From all functions mentioned in the previous slide, control of credit is the most important. ak essential for economic stability and orderly growth of an economy.
Central Bank as the Controller of Credit * The Reserve Bank of India announces the Monetary Policy six times a year. This policy determines the supply of money in the economy and the rate of interest charged by banks The policy also contains an economic overview and presents future forecasts.
Central Bank as the Controller of Credit * The instruments of monetary policy are: Quantitative Qualitative
Qualitative Instruments Margin requirements, Consumer credit regulation and guidelines, Moral Suasion and Direct Action
Quantitative Instruments Bank rate, Statutory Liquidity Ra Cash Reserv Repo Rate k Statutory Liquidity Ratio, * Reverse Repo Rate * Open Market Operations