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Monetary policy

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Published: 25th March 2017 by William Webster

Central Banks (CB’s) have the role of maintaining monetary and financial stability, they produce bank notes and supervise banks and insurance companies. Financial stability may require them to act as “Lender of last resort” to commercial banks. In this way, they provide facilities that promote confidence in the banking sector and more widely in the value of money. In many cases they are independent of government however some commentators believe government influences their decisions, not least by having a hand in the appointment of senior central bankers. Several tools are used to conduct policy. These are discussed below.

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