Send the link below via email or IMCopy
Present to your audienceStart remote presentation
- Invited audience members will follow you as you navigate and present
- People invited to a presentation do not need a Prezi account
- This link expires 10 minutes after you close the presentation
- A maximum of 30 users can follow your presentation
- Learn more about this feature in our knowledge base article
Do you really want to delete this prezi?
Neither you, nor the coeditors you shared it with will be able to recover it again.
Make your likes visible on Facebook?
You can change this under Settings & Account at any time.
BSP Monetary Tools
Transcript of BSP Monetary Tools
PURCHASE / SHARE OF FOREIGN EXCHANGE the buying and selling of government securities (e.g. Treasury Bills) in the open market. Monetary Tool #2
OPEN MARKET OPERATIONS that portion of deposits that a commercial bank
sets aside as vault cash Monetary Tool #3
RESERVE REQUIREMENTS commercial banks borrow money from the BSP; the BSP can set the limit to the funds they borrow and designate the interest rate at which it lends. Monetary Tool #4
DISCOUNT RATE POLICY / REDISCOUNTING *What is the Money Multiplier (Process)? the BSP has the power to make credit difficult or
easy for certain industries to regulate MS Monetary Tool #5
SELECTIVE CONTROLS Increase Money Supply *Sale of Forex Decrease Money Supply *Bsp BUYS government securities *Bsp SELLS government securities Increase in MS Decrease in MS *LOW required reserves increase the MS and the money multiplier* *HIGH required reserves decrease the MS and the money multiplier* the process through which an original deposit to the banking system is multiplied after a series of regular deposit and reloaning. MMCoefficient = 1 / RR(required reserve) *low rediscount rate *high rediscount rate increase in MS decrease in MS the BSP holds session with commercial banks to
lead them toward the attainment of nation goals Monetary Tool #6
MORAL SUASION *A more effective growth strategy is supported by: The Role of Monetary Policy in Growth high positive interest rate liberalization of foreign trade liberalization of foreign trade