Monetary policy and creation of liquidity Cover Image

Monetarna politika i kreiranje likvidnosti
Monetary policy and creation of liquidity

Author(s): Dragan Kovačević
Subject(s): Economy, National Economy, Public Finances
Published by: Finrar d.o.o Banja Luka
Keywords: monetary policy; central bank; liquidity; money reserve;

Summary/Abstract: This article analises,on one side, main source of the liquidity in monetary system and balance sheet of central bank in developed market economy as net foreign liabilities (own foreign money and gold and securities in foreign currencies) and net government credits and cash (domestic currencies) in circulation and other assets item. On another side,when central bank in Currency board arrangement (CBA) has sole right to provide domestic currency it can be done with creating level of money in circulation with determination quantity or price of reserve as a instrument of creation the liquidity. The most diferencies which are important for creation the liquidity between two mentioned monetary systems are connected with impossibility of giving the credits to commercial banks from central bank in Currency board monetary arrangement with respect to absence function central bank as lender of last resort.

  • Issue Year: 12/2021
  • Issue No: 3
  • Page Range: 3-15
  • Page Count: 13
  • Language: English, Serbian