Central bank functions-controller of credit, Managerial Economics

Controller of Credit

The principles of credit control by the central bank were discovered and enunciated after the publication of Bagehot Lombard street in 1873. Even after 1873 the criteria by which the central bank acted were almost entirely rules of thumb and little or no attempt was made at conscious control in pursuit of a consistent policy before world war I. Today however control of credit is the most important function of a central bank and it embraces the most important aspect of central banking policy. It is through this function that all the order function are united and serve a common purpose. So important is this function that if finds place in the law of all central banks. For example the reserve bank of India act 1934, states that bank is generally to operate the currency and credit system of the country to its advantage. The need for controlling credit is obvious. Credit s has become more important than money although latter is the basis of the former. Unwarranted fluctuations in the volume of credit by causing wide fluctuations in the value of money cause great social and economic unrest in the country . the experience of last one hundred years is a testimony to the need for controlling credit in order to maintain the economic and political stability in the economy.

Posted Date: 12/1/2012 6:56:19 AM | Location : United States







Related Discussions:- Central bank functions-controller of credit, Assignment Help, Ask Question on Central bank functions-controller of credit, Get Answer, Expert's Help, Central bank functions-controller of credit Discussions

Write discussion on Central bank functions-controller of credit
Your posts are moderated
Related Questions
Q. What is Data mining? Data mining: Data mining is the process of extracting patterns from data. Data mining is seen as an increasingly important tool by modern business to

Functions of the Budget The budget fulfils three main functions: To raise revenue to meet government expenditure The government of a country provides certain se


"A budget deficit that is only temporary cannot be the source of inflation."  Is this statement true, false, or uncertain?  Describe your answer.

Point and arc elasticity of demand The elasticity of demand is conventionally measured either at a finite point or between any two finite points, on demand curve. The elasticit

Question: EITHER Nowadays, there is an urgency in Mauritius to introduce a rapid transit system in order to reduce traffic congestion and shift towards a more efficient mode


Merits of direct taxes a.  They satisfy the principle of equity as they are easily matched to the tax payers capacity to pay once assessed. b.  They satisfy the principles

Policy conflicts In their attempts to achieve the policy objectives, governments often face what are called conflict of objectives.  These arise partly because unlike private

Inelastic Supply Supply is said to be price inelastic if changes in price bring about changes in quantity supplied in less proportion.  Thus, when price increases quantity sup