Central Banks (chapter 14)

0.0(0)
studied byStudied by 0 people
0.0(0)
full-widthCall Kai
learnLearn
examPractice Test
spaced repetitionSpaced Repetition
heart puzzleMatch
flashcardsFlashcards
GameKnowt Play
Card Sorting

1/5

encourage image

There's no tags or description

Looks like no tags are added yet.

Study Analytics
Name
Mastery
Learn
Test
Matching
Spaced

No study sessions yet.

6 Terms

1
New cards

The Board of Directors

  • The governor (chief executive officer and chairman)

  • Senior deputy governor

  • Deputy minister of finance

  • 12 outside directors

2
New cards

The Governing Council

  • Governor (chair)

  • Senior deputy governor

  • 4 deputy governors

3
New cards

Functions of the BOC

  • Currency

  • Funds management

  • Financial system

  • Monetary policy

4
New cards

Joint responsibility

  • BOC has instrument independence, but not goal independence

  • BOC is responsibility for monetary policy but the government has ultimate veto power

5
New cards

Argument for independence

  • Political pressure would create inflationary bias to monetary policy

  • Avoids political business cycles

  • Avoiding using the bank to facilitate government financing of large budget deficits

  • Monetary policy is too important to leave to politicians

6
New cards

Argument against independence

  • Undemocratic

  • Unaccountable

  • Difficult to coordinate fiscal and monetary policy

  • Some may feel the bank has not used its independence successfully

  • Internationally, while countries with independent central banks have lower inflation, they don’t have very different unemployment rates or output fluctuations