How Does The Central Bank Affect Money
A central bank is a countries national bank or continents main bank for example the Central Bank of Ireland and the European central bank (ECB). Central banks supply financial and banking services for its countries governmental and banking systems. Along with that they also implement the countries monetary policy, supply the country with its currency, it acts as the banker’s bank, its acts as a lender of last resort and also as a clearing agent.
The Central Bank influences the money supply of a country supplying its currency. The money supply is a policy variable that is controlled by the central bank. Money demand is controlled by us. When a central bank increases the money supply it decreases the value of money which causes inflation this happened in Argentina where the government tried to stimulate growth in the economy by printing money but it had a negative effect and decreased the value of their currency and lead to people needing a bundles of cash to buy a loaf of bread. Although the Argentinian government had the right idea it failed. Usually an increase in money supply lowers the interest rate. This …show more content…
This is how the central bank influences governmental decisions. The current economic recession was blamed on greedy bankers advising the government to make risky decisions, it worked for a while but eventually the recession hit and it all caught up with them, the metaphorical “Bubble Burst” and the whole country was affected. The ordinary person bore the brunt of these poorly made decisions. Fiscal policy refers to the governments choices in relation to the overall level of government purchases or taxes left to individual countries. The central bank also acts as an Agent for the government. It collects taxes and other payment owed on behalf of the government it I the bank of the government. It manages public debt and represents the government at international
The Central Bank influences the money supply of a country supplying its currency. The money supply is a policy variable that is controlled by the central bank. Money demand is controlled by us. When a central bank increases the money supply it decreases the value of money which causes inflation this happened in Argentina where the government tried to stimulate growth in the economy by printing money but it had a negative effect and decreased the value of their currency and lead to people needing a bundles of cash to buy a loaf of bread. Although the Argentinian government had the right idea it failed. Usually an increase in money supply lowers the interest rate. This …show more content…
This is how the central bank influences governmental decisions. The current economic recession was blamed on greedy bankers advising the government to make risky decisions, it worked for a while but eventually the recession hit and it all caught up with them, the metaphorical “Bubble Burst” and the whole country was affected. The ordinary person bore the brunt of these poorly made decisions. Fiscal policy refers to the governments choices in relation to the overall level of government purchases or taxes left to individual countries. The central bank also acts as an Agent for the government. It collects taxes and other payment owed on behalf of the government it I the bank of the government. It manages public debt and represents the government at international