- Implementing Monetary Policy
- Controlling Inflation
- Ensuring Financial Stability
- Issuing Currency
- Managing Foreign Exchange Reserves
- Monetary Policy influenced by Geopolitical Factors
How do banks "print money out of thin air"?
- Banks as Lenders: banks grant loans by creating new deposit to borrower
- Money Creation Through Lending: new deposit represents new money creation with a record of the loan in the accounting system
- "Out of Thin Air": money was not physically printed but created through accounting and lending
- Central Banks: have the power to create money which they lend to commercial banks and for quantitative easing where they either purchase government bonds and other assets to inject money into the economy
- Government spending: spending more and collect in taxes which stimulates economy but may also lead to inflation
