Overall Monetary Policy Of The Government And Its Impact On The Macro Economic Objectives

1202 words - 5 pages

Overall Monetary Policy of the Government and its Impact on the Macro Economic Objectives

1. Introduction to the Monetary Policy

The Monetary Policy of any country is an important one, as it defines the role and establishment of a central bank within a country and through it attempts to regulate and manage the money supply within an economy in order to achieve specific goals such as

Constraining Inflation or Deflation

Maintaining an Exchange rate

Achieving full employment or economic growth

Affect on the balance of payments

The monetary policy can involve key actions such as

7 Changing certain Interest rates either directly or indirectly ...view middle of the document...

As a medium of exchange

A store of Value

A unit of account

A standard of deferred payment

People are willing to give up goods and services for money, thus money could function as a good medium of exchange.

Money generally keeps its value (Except in the case of inflationary pressure) and therefore is a good store of value.

The value of a product or service can be measured in terms of money, thus making it a good measure of unit of account

Since people are willing to accept money as future payments (Ex – Salaries), it has become a good method of deferred payment

The supply of money is manipulated by financial institutions which act as an intermediary in the money and supply process.

There are quite a number of financial institutions in Sri Lanka

1. Commercial Banks

Also known as retail banks. They attempt to attract savings from customers which are then lent out to other customers or invested. They specialize in individualized banking services. Examples would be Commercial Bank of Ceylon Limited, Hatton National Bank Pvt Ltd, Seylan Bank Pvt Ltd

2. Development financial institutions

Provide medium and long tern Finance to the export sector for growth and development Examples Include The Development Finance Corporation of Ceylon (DFCC) and the National Development Bank (NDB)

3. Merchant/ Investment Banks

Offer a wide variety of services such as leasing, bill discounting, underwriting share issues, margin trading facilities, loan syndication, managing private share issues /placements bridging finance, participation in project equity, other forms of project finance, financial and management consultancy services.

4. Finance companies

There are currently 25 listed finance companies, which offer short term lending and hire purchase activities. They also engage in accepting deposits from the public, and are closely monitored by the central bank

5. Leasing Companies

Even though commercial banks etc provide leasing facilities, there are leasing companies in lease finance which are mainly for commercial vehicle and equipment purchases.

6. Mortgage banks

Engage in long-term lending to selected sectors. The State Mortgage and Investment Bank (SMIB) provide long term primarily for housing purposes. In addition SMIB provides other loans for agricultural purposes

7. Venture Capital Companies

Provide finance for equity of new projects and for the expansion of existing projects.

8. Savings Bank,

Its primary activities are accepting various savings deposits from public, investing in government securities, and investing in long-term debt instruments. Ex – The national Savings Bank (NSB)

9. Pension funds

Employees' Provident Fund and Employers' Trust Fund (Pension Funds). Contributions come by way of legal contributions from employers and employees. EPF is the single largest investor in the domestic financial market. Its primary activities are...

Other Essays Like Overall Monetary Policy of the Government and Its Impact on the Macro Economic Objectives

Identification of the Mexican Monetary Policy and the Fiscal and Monetary Indicators

1298 words - 6 pages desarrollo estabilizador) c) 1982- ………: Neoliberal model. (Modelo neoliberal) in order to understand this models and its implications it’s important to make sure a clear understanding about the policies. The Macroeconomic policy affects a country or region as a whole. It deals with the monetary, fiscal, trade and exchange regime, as well as economic growth, inflation and national rates of employment and unemployment. Changes in demand and

The Apple Company And The Monetary Policy

2662 words - 11 pages to influence the amount of money in our economy, and the monetary policy affects the Apple Corporation. The Purpose and Function of Money What is money? Money is a medium of exchange, a store value, and a unit of account. When you think about it, money in America is just a piece of green paper or a coin with an important person on it. Even though it is a piece of paper or a coin we give it value because that

The Monetary Policy

1430 words - 6 pages The monetary policy involves all the actions of the central bank on the economy of any country. The monetary affect the growth of a country. The monetary policy also has an influence on the interest rate of a specific country. It is a regulatory measure by the central bank. This paper will critically look on the monetary policy and economic models that are applied to make the monetary policy successful. There are certain goals of the monetary

The Impact of Globalization on Economic Decisions

542 words - 3 pages In 2012, McDonald’s Corp had a 4.5% decrease as economic troubles pressured margins and consumer confidence. Due to higher food, labor, occupancy and business investment costs, McDonald’s had negative profitability. In addition to the already difficult situation, consumer confidence was at an all time low, with consumers pressuring them to increase its marketing and promote value. “McDonald’s are experiencing headwinds on both the top and

Motivation And Its Impact On Performance Of The Employees

3113 words - 13 pages The research focuses on Motivation and Its Impact on Performance of the Employees. Motivation is derived from the concept of hedonism, which means that humans always search for joy and comfort and want to save themselves from tension and pain. (Kamal, Khan, Khan and Khan, 2006) Li quoted , Motivation is a general term applying to the entire class of drives, desires, needs, and wishes. It is essentially a process by which an individual

The Impact Of The Global Financial Crisis On Economic Growth

3967 words - 16 pages overall level of economic activity. The policy utilizes the Commonwealth Government’s Budget to achieve the government’s economic objectives such as by altering the level of government expenditure and taxation manipulating the level of economic activity and hence influencing economic growth. In response to the Global Financial Crisis, the Australian Labour Government had implemented a Budget deficit where total government expenditure exceeded total

Essay on Liberalization and Its Impact on the Indian Economy

4626 words - 19 pages optimum allocation of resources, thus balancing the country's two main "Objectives "growth' and 'equity'. A realization has since dawned on policy-makers, based on India's own experience and the experience of other countries, that: The domestic economy has now reached a threshold where for better utilization of resources the benefits of the market forces can be harnessed, by proper market-friendly macro and micro- economic policies helping both in

The Impact of the Global Economic Crisis on the World Economic Order

772 words - 4 pages , the emirate’s investment arm, announced that it would seek a six-month freeze on debt repayments of almost $60 billion, prompting concerns about its economic health. Billions in debt Dubai World has $59bn of liabilities, a large proportion of the Gulf emirate’s total debt. ECONOMIC GROWTH The combination of falling oil prices and reduced oil production will negatively impact the growth prospects of GCC countries in the period under review

Biophilia and Its Impact on the Human Species

728 words - 3 pages Brandon Moore Biophilia and its impact on the Human Species November 7, 2014 Dr. Henry Zeidan Biology and Society BIO1050 Life on this planet is defined and shaped by a never ending cycle of relationships, and happenings. From live birth, to photosynthesis, to the purification of water, every single element or organism on this planet interacts and bonds with something else in order to produce another creation. As humans we are born with

Microsoft Kinect and Its Impact on the Future of Health Care

1245 words - 5 pages the way many areas of healthcare is practiced and as more innovations emerge will continue to play a role in the changing face of healthcare. Introduced to the public in 2010, Microsoft Kinect is a wireless game controller that allows humans to interact with their computers using movements, gestures and voice commands (Terry). Released as an attachment to a video game, its potential in health care became evident quickly. Surgeons at a

Economic And Monetary Union Of Europe

1015 words - 5 pages chance of causing significant economic growth in the member countries by abolishing all kinds of barriers e.g. customs controls, trade restrictions, liberation of the movement of capital, tax harmonization, and by the opening of the financial market, a common trade policy, a common service market, common legal protection of companies and so on.      The two countries who support the European integration most (at least

Related Papers

The Economic Crisis And Its Impact On Defense

890 words - 4 pages THE ECONOMIC CRISIS AND ITS IMPACT ON EUROPEAN AND CYPRUS DEFENSE By Dr Aristos Aristotelous The relentless question of prioritizing and allocating scarce national resources to unlimited uses and requirements becomes even harder in times of economic crisis. In Cyprus - as in other EU countries - the tragic state of the economy and the need to exit from the crisis, brings unbearable pressure on military spending and is impacting on priorities

Macro Economic The State Bank Of Vietnam A Snapshot Of Monetary Policy During 2011 – 2013 In Reviews

2472 words - 10 pages   SBV  has  remained firm in keeping the exchange rate between Vietnam Dong and USD at around 21,000  VND/USD. Right from the beginning of the year, SBV has set a target to curb the fluctuation in  the  exchange  rate  to  not  exceed  2‐3%  and  control  the  expectation  of  devaluation  of  the  Vietnam dong. In order to achieve these objectives, SBV has adjusted averageÂ

How Successful Is The Macroeconomic Framework Established By Emu? Answer By Focusing Specifically On Monetary Policy: Is The Ecb An Inflation Targeting Central Bank? Evaluate Its Performance In The...

1505 words - 7 pages the past 10 years. Firstly, I will look into the fiscal policy set out by the EMU however the bulk of the text will look into the monetary policy framework. Finally I will conclude by briefly trying to pin point the links between the macroeconomic framework to the current Eurozone crisis. In general on average the Eurozone’s first decade is viewed as a success and the ECB met its targets by delivering low and stable inflation with an output

Budget Deficit And National Debt And Its Impact On Future Economic Growth

543 words - 3 pages As I have stated before below is our protocols for transacting our business on the Euroclear Screen with instruments that are Beneficially owned with a Registered/Titled Owner:- Protocols:- 1)    The Securities can be Corporately Invoiced with Copy of Euroclear Title Page 2)    The Securities are screen-able on EUROCLEAR 3)    The Securities are on balance sheet (Cashed Backed) payable with the full faith and credit of the issuing bank