Policy conflicts in debt and monetary management, Financial Management

Assignment Help:

Policy Conflicts in Debt and Monetary Management:

Co-ordination of operations is important so as to avoid differences in the policies of cash and debt management of the government and central bank. This is particularly required keeping in view the fact that the timing and volume of issues of Government Securities need not always coincide with the monetary regulations of the central bank. The central bank needs to consider the liquidity provision if the Government wants to issue securities at a time when the market is illiquid. In such cases the central bank can provide liquidity through the secondary market or through the primary market where the central bank manages both the debt and monetary policy.

At present it can be said that, almost in all countries the central banks are working in tune with the fiscal authority, both at the policy formulation and implementation levels of debt management. Generally it is said that being an agent to the fiscal authority can be problematic for central bank and this can be reduced if the debt management function is separated from the central bank. Such separation should be preceded by institutional and technological infrastructure, fiscal control and developing financial markets otherwise, high fiscal deficit could increase the risk of instability in the economy.

In its recent monetary policy statement, the RBI made its intentions clear about the separation of the debt management function in this regard and the conditions that have to be fulfilled to separate the debt management function. The conditions are: development of financial markets, adequate control over the fiscal deficit and necessary legislative changes. Also, institutional framework for setting up a separate Debt Office for managing the debt functions should be planned. The debt of both central and state governments can be managed by setting up an independent corporate structure.

 


Related Discussions:- Policy conflicts in debt and monetary management

Explain gresham’s law, Explain Gresham’s Law. Answer:  Gresham’s law cons...

Explain Gresham’s Law. Answer:  Gresham’s law considers to the phenomenon that bad (abundant) money drives good (scarce) money out of circulation. This type of phenomenon was fre

What is the irr of the project, QUESTION Part A: 1. Nev Plc is consi...

QUESTION Part A: 1. Nev Plc is considering to invest in a machine to manufacture a new line of umbrellas. The following data has been assembled in respect of the investment:

Profitability index method - benefit cost ratio, Do you guys provide Profit...

Do you guys provide Profitability Index Method assignment help? I need writing a report on Profitability Index Method and it is about 2000 words. Let me know. I need to buy your so

OPERATING CYCLE, #discuss the applicability of operating cycle to poultry b...

#discuss the applicability of operating cycle to poultry business.

Financial system, Financial System: The economic development of a natio...

Financial System: The economic development of a nation is reflected by the progress of the various economic units, broadly classified into corporate sector, government and hous

Expansion financing, The securing of the working capital needed for the sup...

The securing of the working capital needed for the support of raises in accounts receivable and inventory related with an organizations initial expansion time.

The time value of money , Calculate the present value and determine the npv...

Calculate the present value and determine the npv, Financial Management. Assume today is 3 December 2009. Helen is 30 years old and has a Bachelor of Business. She is currently em

Debt holders versus shareholders, Debt holders versus Shareholders A se...

Debt holders versus Shareholders A second agency problem arises because of potential conflict between stockholders and creditors. Creditors lend finances to the firm at rates w

What are the specefic control procedures of benchmarking, What are the spec...

What are the specefic control procedures of benchmarking Specific control procedures must be in place which include: O Organisational structure (clear lines of responsibilit

Expected value application in finance - safety stock level, Safety Stock Le...

Safety Stock Level The simple Economic Order Quantity (EOQ) model used in inventory management assumes that the reorder point  will be at a level equal to (Lead time in number

Write Your Message!

Captcha
Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd