Monetary

The proposals of the experts, legislators, government and

the central bank with respect to monetary policy
consequences of their implementations
Legislator function in central bank in monetary policy.

Legislative process - Congress is responsible for making enabling laws to make sure the spirit of
the constitution is upheld in the country and, at times, amend or change the constitution itself. In
order to craft laws, the legislative body comes out with two main documents:
bills and resolutions

Bill- A bill is proposed legislation under consideration by a legislature. A bill does not become law until it
is passed by the legislature as well as, in most cases, approved by the executive. Once a bill has been
enacted into law, it is called an act of the legislature, or a statute.
Resolutions

Resolutions- the act or process of resolving: such as. a : the act of analyzing a complex notion into
simpler ones. b : the act of answering : solving. c : the act of determining.
 Legislative implementation in central bank- The five functions of a central bank are:

⮚ Maintaining macroeconomic stability.

⮚ Lender of the last resort for financial stability.

⮚ Being a bank to the government.

⮚ Implementing the monetary policy.

⮚ Regulating the financial sector.

Central banks play a crucial role in ensuring economic and financial stability. They conduct
monetary policy to achieve low and stable inflation. In the wake of the global financial crisis,
central banks have expanded their toolkits to deal with risks to financial stability and to manage
volatile exchange rates. In response to the COVID-19 pandemic, central banks used an array of
conventional and unconventional tools to ease monetary policy, support liquidity in key financial
markets and maintain the flow of credit. Central banks need clear policy frameworks to achieve
their objectives. Operational processes tailored to each country’s circumstances enhance the
effectiveness of the central banks’ policies. The IMF supports countries around the world by
providing policy advice and technical assistance.
What are the consequences of monetary policy?
 Monetary policy impacts the money supply in an economy, which influences interest rates and the
inflation rate. It also impacts business expansion, net exports, employment, the cost of debt, and the
relative cost of consumption versus saving—all of which directly or indirectly impact aggregate
demand.

What are the effects of monetary policy?

Monetary policy influences economic activity by changing the incentives for saving and investment.
This channel typically affects consumption, housing investment and business investment. Lower interest
rates on bank deposits reduce the incentives households have to save their money.
Monetary policy is implemented by the central bank.

⮚ Central banks conduct monetary policy by adjusting the supply of money, generally through
open market operations. For instance, a central bank may reduce the amount of money by
selling government bonds under a “sale and repurchase” agreement, thereby taking in money
from commercial banks.
⮚ The central bank has been described as the "lender of last resort," which means it is
responsible for providing its nation's economy with funds when commercial banks
cannot cover a supply shortage. In other words, the central bank prevents the country's
banking system from failing.