Hello to everyone, I am Kojo Solomon Mbade. From Nigeria hope am wellcome, trying to fine my own people, banking and finance is a special field, hope @odalyss, @Lunajey, @siriusli, @sebarom, @otmane.riad, @boymoteski, @sagarc, @svetik44, @amir9988 and lot of others can testify 🤷🏽♂️🤷🏽♂️.. need yours support..
Let get going!
Monetary policy this refers to discretionary decision, rules made by the monetary authority to check an monitor the flow of funds in an economy,
While deposit money banks refers to any company or organization license to accept deposit, operate savings, current and fixed deposit account, give out loan and advance as well as any other discretion set by the authorities.
The effect of monetary policy, the monetary policy has their own duties and responsibilities ranging from ; price stability, cope unemployment, increase standard of living, check mate terms of trade an balance of payment, etc. The only way to deal with that is to used their main passed which is most likely the banks, since there interact with the general public directly.
Banks on their part have objectives like profit maximization and increases share holders wealth.. main while helping the monetary authorities too to achieve their goals.
Monetary policy make policy using; monetary policy rate, cash reserve, liquidity ratio, etc to make sure that this instistution are regulated not only for their self but for the growth of the economy, growth of the banks, protection of depositors funds and the system at large.
Different government have different ways which there operate, but one thing is common among them, there want their economy to be strong, such that the objective will be achieved.
Monetary policy rate; if Government increase it rate banks are meant to reduce the amount of loans there give out. Since people will not want to borrow from them because of the high rate of interest, on the other hand it gives depositors advantage to add more since their rate too might be increased, while government used this is to either increase or reduce the volume of money in circulation. It also apply to cash reserve ratio and liquidity ratio.
Though government can also used taxes to increase or reduce the fund flow and this is were fiscal policy comes in.
Thanks for reading my post ...@solomon5
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