View Full Version : Central demands to ensure the safety of the banking system

05-31-2015, 03:48 AM
Central demands to ensure the safety of the banking system

5/31/2015 0:00

D. Qusay al-Jabri: price stability of the most important priorities
BAGHDAD - Imad Emirate

Keen monetary authority to achieve a high level of use and install economic activity at the highest possible level of employment of natural and human resources and to take measures to reduce the levels of unemployment and the accompanying deflationary factors in output through expansionary monetary policy to increase investment and income levels, as well as working to alleviate violent and persistent changes in the price level for the attendant fluctuations in the value of money and the resulting adverse effects in the distribution of income and wealth level and the allocation of economic resources, this is what he said «morning» d. Qusay al-Jabri, Dean of the Faculty of Administration and Economics at Mustansiriya University.
Monetary values

He d. Jabri comes stabilize prices of the most important priorities of the monetary authority to maintain the value and volume of cash circulation in the economy as well as to maintain the monetary values ​​with real values ​​in the economy in relation to the growth of output, and interfere with the monetary authority by controlling the interest rate the banking and credit in controlling spending economic units in order to maintain the integrity of the currency swing, which infect a result of balance of payments deficit, when a deficit in the balance of payments raise the monetary policy interest rate, leading thus to a decline in credit economic units and then their liquidity makes them regain their capital employed abroad on the one hand and the flow of foreign capital to the inside the impact of higher domestic interest rate leads to higher foreign asset size and improve the balance of payments and the opposite happens in the case of surplus, and seeks monetary authority to influence the investment environment and rehabilitation and then achieve a continuous and adequate increase in real GDP growth, or average real per capita income by influencingin investment by changing the interest rate, leading to a growth in output and then narrow Fjute.
Obstacles to monetary policy

He d. Jabri, hinder monetary policy, a number of obstacles in her career to achieve its goals adopted and comes in the forefront of the conflict between the goals in terms of monetary policy suffers from the inability to achieve two goals or more in that one, for example, to achieve stability in prices often collides with the stabilization of interest rates and access to a high rate of use as the reduction of inflation requires a deflationary monetary policy works to raise interest rates, what causes the reduction of investment and use and requires the ultimate goal to take a range of measures that require a period of time to select and begin its implementation and the achievement of results was obtained during the period of time a shift inthe economic situation so that the measures are not commensurate with the situation that had taken place and the goals came to realize them.
Financial panic

He cautioned d. Jabri on the condition of the financial panic that could undermine the monetary policy of what it wants if it occurred, should the monetary authority to change its strategy in the event of a financial panic so as to ensure the safety of the banking system and the flow of credit properly, under a deflationary policy if it occurred the case of financial panic reasons may not be cash, but real reasons or expectations of individuals this would hinder monetary policy, as the monetary authority should pursue an expansionary policy to avoid aggravation of the situation.

Jabri pointed out that the financial panic and the sharp recession that is likely to happen after that can result in substantial unemployment, then it can ease the financial panic logically through increased operating or make the central bank reserves are easily available through the mechanism of an opponent to provide liquidity to the banks to deal with withdrawals of individuals and then control of the bout financial panic, and when the monetary authority follow the contractionary policy through interest rate significantly, this action will cause instability business and capital markets and portfolio investment environment among individuals, which may generate a wave of anger among the dealers in the economy may have for it the monetary authority to change its policy.