The role of the government and the central bank in financial sectors in developed countries

The functions of the Bank, explicitly summed up in the Bank Charter, are; First, the Bank is the only institution entitled by law to issue paper money in the Countries Curacao and St. The Bank also is charged with the circulation of coins. Second, the Bank supervises banking and other credit institutions to primarily promote the stability, integrity, efficiency, safety, and soundness of the financial sectors of the countries Curacao and Sint Maarten in general and to safeguard the interest of the depositors and other creditors of the banking and other credit institutions in particular.

The role of the government and the central bank in financial sectors in developed countries

What are the roles and functions of central banks? Why do they need Economic staff? How far should central banks get involved in data collection and areas such as seasonal adjustment, as well as economic analysis?

This paper will explore the different areas, including the role of Central Bank in effecting monetary policy and intervening body in exchange rate trades, Central Bank as a Last Lender Resort LLRand Central Bank as a regulatory body of the financial sector. Prior to further discussion, it is important to stress that the role of Central Bank and the scope of its involvement may vary due to the effect of different legislations and the presence of various stakeholders.

The discussion shows that this information is highly important for other market players and forecasting agencies as it reduces the information asymmetry.

The role of the government and the central bank in financial sectors in developed countries

The role of Central bank in macroeconomic stabilization Chandavarkar cited in Geraats, claims that macroeconomic stabilization is the pivotal role of the Central Bank. The stabilization duties include such aspects as the stabilization of the domestic price level and exchange rate as well as domestic payment systems.

The entry and operations of MNEs on the domestic market as well is the growing interdependence of the domestic economy on the business cycles of other leading global players might create serious financial repression Geraats, As a result, potential borrowers obtain lower wealth relative to the size of the projects.

Whereas unpredictability and low confidence give rise to the agency costs and undermines the performance in the investment sector.

The Role of Central Banks in Promoting Sustainable Growth - Central Bank

Referring to the practice of the Central Bank of Japan they state that these interventions are designed to minimize negative development of foreign exchange trades. In this case, if there is a controversy between intervention and prior activities of the Central Bank, market players can get confused and increase the overall noise on the market.

As a result, it can cause higher fluctuations of rates and a greater degree of information asymmetry between the market agents. Hence, the objective of the Central Bank is to undertake stabilization measures which are consistent with the rational expectations of market agents.

The failure to do so may increase the level of noise and cause severe market failures. The national agenda and the reasons behind the changes of the inclusion policy One of the main reasons directing changes for the inclusion policy was the social changes that the UK has been going through over the past two decades.

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The rise of the immigration flow has changed the British society and culture, and the schools should be ready to face this change. The Race Relation Amendment Act in sets guidelines for every school to have a policy which values diversity and challenges racism.

What is more, the national curriculum regarding the taught information given to students needed to be changed in order to promote inclusion. Another factor which brought changes to the agenda regarding inclusive learning was the demand for lifelong learning Shapiro and Rich, The policy of inclusion had to be changed once again so that for the educational system to consider adults as people who were willing to learn and as people who were actually in need of further education.

The fact that adults were broadly entering the educational system has also brought changes to the national agenda and to the national curriculum.

Because of increasing social competitiveness and subsequently the need for employment, the inclusion policy and the national curriculum were changed so as to provide to adult learners job-related learning opportunities. Finally, it should be noted that the national agenda cannot remain static Halliday, Changes need to be made so as to address the needs of different students in a better manner.The central bank in a developing economy performs both traditional and non-traditional functions.

The principal traditional functions performed by it are the monopoly of note issue, banker to the government, bankers’ bank, lender of the last resort, controller of credit and maintaining stable exchange rate. This paper will explore the different areas, including the role of Central Bank in effecting monetary policy and intervening body in exchange rate trades, Central Bank as a Last Lender Resort (LLR), and Central Bank as a regulatory body of the financial sector.

Roles and objectives of modern central banks 18 Issues in the Governance of Central Banks 2 – including the important financial stability function – remain to be spelled out clearly, limiting the completeness of governance arrangements.

Second, difficult trade-offs often must be made between multiple objectives in relation to specific functions and. Step between a currency board and a central bank, with the government exerting a strong influence on its financial activities Supranational central bank Undertake central banking activities for a group of small countries participating in a monetary union, perhaps also as part of a custom union.

The role of the central bank in promoting quality financial institutions lies in the design and implementation of policies, which encourage domestic savings to remain at home and to flow to the local financial institutions.

The central bank is an indispensable institution—be it in a developed or a less developed country. But there was a time when people believed that a central bank, being a luxury institution, must not be set up—at least in an underdeveloped economy.

Role of a Central Bank in Less Developed Countries