The document discusses central banks and monetary policy. It outlines the key tasks of central banks, which include issuing currency, implementing monetary policy, and maintaining price stability. Central bank independence is important for achieving price stability as it shields monetary policy from political pressures. Central banks use various monetary policy instruments like reserve requirements, open market operations, and interest rates to influence money supply and inflation. The document also provides details on Egypt's central bank, including its monetary policy objectives, interest rate decisions made by the monetary policy committee, and inflation measures.
Financial Development and Economic Growth Nexus in Nigeriaiosrjce
The study assessed the impact of financial development on economic growth in Nigeria using time
series data from 1970 to 2012. The Autoregressive Distributed Lag bounds testing approach to cointegration
was utilized for this study. The result from the ARDL model indicate that the variables for this study are
cointegrated while the error correction term appeared significant and confirms that short-run disequilibria are
corrected up to about 50 percent annually. The empirical results reveals that financial development exerts
positive and significant impact on economic growth in the long-run while trade liberalization variables exert
negative impact on economic growth in the long-run indicating non-competitive nature of non-oil domestic
products in the international market. In the short-run, domestic credit is insignificant which indicates a dearth
of investible funds in the economy. There is evidence that financial development policies influence economic
growth in the long-run and not in the short-run. This study among others recommends the urgent need to
implement policies that will strengthen the deposit mobilization and intermediation efforts in the banking system
in other to deepen the financial system. Nigerian trade performance should be improved through economic
diversification and further availability of funds to private sector at competitive interest rate in order to produce
internationally competitive products.
The presentation describes the relation between Financial development and growth in Emerging Market Economies. It is primarily based on abstract. However, one can contact me for further details.
Central Banking.
My Presentation Report.
THROUGH ITS VARIOUS MONETARY TOOLS
It can regulate the monetary and credit conditions of the country
Increase investments
…production
…employments
…incomes
It can stabilize, together with fiscal policies.
In the Formulation and Implementation of Monetary Policies
CENTRAL BANK requires…
High degree of competence
Integrity
Central Bank must demonstrate an unquestionable independence from any political considerations which affect adversely its functions.
Envisioned primarily to promote economic growth for the welfare of the people.
Not to serve the interests of the elite and those who are in power.
Central Bank may be referred to as a body corporate entrusted with the responsibility of administering the monetary, banking, and credit system of the country with due regard to the availability, use, and cost of money and credit for attainment of a balanced and sustainable growth of the economy, as well as, the maintenance of internal and external monetary stability in the country.
-R.A No. 265, Sec. 1,2, 64 and 67
Before 20th century
There had been a loose and vague of central banking.
Banking institutions that substantially performed the role of central bankers in many banks of the world, referred to as “banks of issue” or “national banks”.
Role of Monetary Policy and Central Banking in Combating Inflation Andishga...Amir Fassihi
Andishkadeh of Economics
Saeed Abtahi, DBA
Sunday October 13th, 2013 (4pm-7pm)
UCLA (Neuroscience Research Building)
635 Charles E Young Dr
Andishgah Lecture Series
The Role of Central Bank and Monetary Policy in Iran
The Iranian economy is in dire shape, with inflation running rampant as a direct consequence of the previous administration’s flawed economic policies. It is generally accepted that taming inflation requires a strong, transparent, independent and accountable central bank that has at its disposal the appropriate financial instruments to transmit monetary policy.
This presentation will:
v Address the current practices of monetary policy and central banking in Iran; and
v Provide a number of recommendations that Iranian authorities should consider to prevent Iran’s economy from edging toward disastrous hyperinflation.
Saeed Abtahi, DBA is an international investment banker, with 33 years of working experience in Europe, U.S., and the Middle East advising multi-national corporations, banks, government agencies and sovereign wealth funds in capital markets, corporate finance, asset management and strategic advisory works.
He is a resident of Los Angeles and consults his clients in California, Kuwait, and Abu Dhabi.
Saeed Abtahi earned his B.S. in Electrical Engineering and M.S. in Operation Research from Massachusetts Institute of Technology, and DBA in Finance from Harvard Business School.
central bank is the father of all banks, main regulatory body of the nation which control and regulate all the banks of the country. central bank is the financial advisor to the government.
Financial Development and Economic Growth Nexus in Nigeriaiosrjce
The study assessed the impact of financial development on economic growth in Nigeria using time
series data from 1970 to 2012. The Autoregressive Distributed Lag bounds testing approach to cointegration
was utilized for this study. The result from the ARDL model indicate that the variables for this study are
cointegrated while the error correction term appeared significant and confirms that short-run disequilibria are
corrected up to about 50 percent annually. The empirical results reveals that financial development exerts
positive and significant impact on economic growth in the long-run while trade liberalization variables exert
negative impact on economic growth in the long-run indicating non-competitive nature of non-oil domestic
products in the international market. In the short-run, domestic credit is insignificant which indicates a dearth
of investible funds in the economy. There is evidence that financial development policies influence economic
growth in the long-run and not in the short-run. This study among others recommends the urgent need to
implement policies that will strengthen the deposit mobilization and intermediation efforts in the banking system
in other to deepen the financial system. Nigerian trade performance should be improved through economic
diversification and further availability of funds to private sector at competitive interest rate in order to produce
internationally competitive products.
The presentation describes the relation between Financial development and growth in Emerging Market Economies. It is primarily based on abstract. However, one can contact me for further details.
Central Banking.
My Presentation Report.
THROUGH ITS VARIOUS MONETARY TOOLS
It can regulate the monetary and credit conditions of the country
Increase investments
…production
…employments
…incomes
It can stabilize, together with fiscal policies.
In the Formulation and Implementation of Monetary Policies
CENTRAL BANK requires…
High degree of competence
Integrity
Central Bank must demonstrate an unquestionable independence from any political considerations which affect adversely its functions.
Envisioned primarily to promote economic growth for the welfare of the people.
Not to serve the interests of the elite and those who are in power.
Central Bank may be referred to as a body corporate entrusted with the responsibility of administering the monetary, banking, and credit system of the country with due regard to the availability, use, and cost of money and credit for attainment of a balanced and sustainable growth of the economy, as well as, the maintenance of internal and external monetary stability in the country.
-R.A No. 265, Sec. 1,2, 64 and 67
Before 20th century
There had been a loose and vague of central banking.
Banking institutions that substantially performed the role of central bankers in many banks of the world, referred to as “banks of issue” or “national banks”.
Role of Monetary Policy and Central Banking in Combating Inflation Andishga...Amir Fassihi
Andishkadeh of Economics
Saeed Abtahi, DBA
Sunday October 13th, 2013 (4pm-7pm)
UCLA (Neuroscience Research Building)
635 Charles E Young Dr
Andishgah Lecture Series
The Role of Central Bank and Monetary Policy in Iran
The Iranian economy is in dire shape, with inflation running rampant as a direct consequence of the previous administration’s flawed economic policies. It is generally accepted that taming inflation requires a strong, transparent, independent and accountable central bank that has at its disposal the appropriate financial instruments to transmit monetary policy.
This presentation will:
v Address the current practices of monetary policy and central banking in Iran; and
v Provide a number of recommendations that Iranian authorities should consider to prevent Iran’s economy from edging toward disastrous hyperinflation.
Saeed Abtahi, DBA is an international investment banker, with 33 years of working experience in Europe, U.S., and the Middle East advising multi-national corporations, banks, government agencies and sovereign wealth funds in capital markets, corporate finance, asset management and strategic advisory works.
He is a resident of Los Angeles and consults his clients in California, Kuwait, and Abu Dhabi.
Saeed Abtahi earned his B.S. in Electrical Engineering and M.S. in Operation Research from Massachusetts Institute of Technology, and DBA in Finance from Harvard Business School.
central bank is the father of all banks, main regulatory body of the nation which control and regulate all the banks of the country. central bank is the financial advisor to the government.
Monetary policy in pakistan.
How monetary policy works
Monetary policy tools
Target rates
Central bank policy
State Bank Of Pakistan
Inflation rate
Interest rate
Economic growth
balance policy
Monetary policy: monetary orthodoxy or quantitative easing?Jérémy Morvan
What is monetary policy?
Presentation of conventional monetary policy and quantitative easing. The presentation also includes a (brief) history of the monetary policies of some major central banks: European Central Bank, Fed Reserve System, Bank of England and, Bank of Japan.
Monetary policy in pakistan.
How monetary policy works
Monetary policy tools
Target rates
Central bank policy
State Bank Of Pakistan
Inflation rate
Interest rate
Economic growth
balance policy
Monetary policy: monetary orthodoxy or quantitative easing?Jérémy Morvan
What is monetary policy?
Presentation of conventional monetary policy and quantitative easing. The presentation also includes a (brief) history of the monetary policies of some major central banks: European Central Bank, Fed Reserve System, Bank of England and, Bank of Japan.
The main purpose of this research is to study and highlight that central bank of Jordan (CBJ) plays an important role in economic development. The objective of the financial organization shall be to keep up financial and money stability, to confirm the interchangeability of the Dinar, and to contribute in achieving the banking and money stability within the Kingdom likewise as promoting sustained economic process in accordance with the overall economic policies of the government. To achieve the above- mentioned objectives, CBJ assumes many tasks portrayed in drawing and implementing the financial policy within the Kingdom through an integrated system of monetary policy instruments, setting a evaluation policy of the Dinar compatible with the Jordanian economy, maintaining and managing the Kingdom’s reserves of gold and foreign currencies, regulation credit within the Jordanian economy so as to realize financial and money stability likewise as comprehensive economic process, and issue and regulation bank notes and coins. Subsequently, the central bank plays necessary role within the economic resource allocation of the country. The banking industry may be a major issue that affects the organization of social and economic life cycle within the economies of the planet. it is thought about as associate degree indicator of economic and social growing.. Also, developed financial set up ought to be characterized by the existence of a contemporary and complicated banking industry that contributes to achieving economic balance. It conjointly encourages domestic and foreign investment through the banking system’s ability to states. The aim of the banking industry is to draw in savings domestically and abroad, and direct those savings into productive investment. As a result, this contributes to the accomplishment of economic and social development method, and conjointly facilitates investment activity.
Article 1Authors Christian Ewerhart, Nuno Cassola, Steen Ejersk.docxfredharris32
Article 1
Authors: Christian Ewerhart, Nuno Cassola, Steen Ejerskov, Natacha Valla
Title of the article: Manipulation in money markets
Journal Name: International Journal of Central Banking, March 2007
Summary
The article talks about the impact of manipulation in the implementation of the monetary policy. The authors claim that as a result of the impulsive reactions to the fundamental index of interbank interest rates, manipulation has turned out to be a major challenge for the operational enactment of the monetary policy. Therefore, to address the issue, the authors have focused on a microstructure model whereby a commercial bank can have a strategic alternative to the standing facilities of the central bank. They typify equilibrium where market rates are positively manipulated. The findings of the study prove that manipulation can be lucrative for a commercial bank with appropriate ex-ante features. And so, manipulation will continue to be a characteristic of equilibrium albeit stakeholders in the derivatives market create rational prospects regarding potential manipulation. The authors conclude by recognizing that the monetary authority has controlling techniques to fight manipulation and that further vigilance is required to ascertain that there is no operational manipulation (Ewerhart, Cassola, Ejerskov, & Valla, 2007).
Key points
The principal ideas discussed in the article regarding manipulation in the money markets include:
· Manipulation is a potential concern in money markets, particularly when a commercial bank holds a profitable position in which it can gain from may be an increase in interest rates.
· From an operational viewpoint, manipulation can increase volatility to the immediate interest rate thereby complicating the liquidity control of both the central bank and the commercial banks.
· Manipulation can have an impact on the market's confidence during a smooth execution of monetary policy, which will in turn affect the long-term refinancing conditions thereby upsetting the effectiveness of the monetary policy.
· The decision to manipulate a market by a commercial bank is contingent on factors such as the bank's general trading and deposit capacities, its readiness to take premeditated measures in search of profitable frontiers as well as the internal distribution of its risk budget between money markets.
· Competition amongst potential manipulators cannot impede the likelihood of manipulation.
· The immediate reaction by the central bank can help in reducing the volatility in the money markets caused by manipulations.
Reaction to the article
The microstructure model used in the study to show that manipulation can be lucrative for a commercial bank is efficient to illustrate the nature of financial markets. The model implies that investors can benefit from insider information and use it to change the nature of financial markets. In the financial stock market, insider information may lead to trading of stocks between invest ...
What Is Monetary Policy?: Unlock The 2 Important Types Of It Compare Closing LLCCompareClosing
Monetary policy is a set of tools built with the intention of promoting sustainable economic growth.
A country’s central bank promotes these tools by controlling the overall supply of money that is available at the nation’s banks, its consumers, and its businesses.
BONKMILLON Unleashes Its Bonkers Potential on Solana.pdfcoingabbar
Introducing BONKMILLON - The Most Bonkers Meme Coin Yet
Let's be real for a second – the world of meme coins can feel like a bit of a circus at times. Every other day, there's a new token promising to take you "to the moon" or offering some groundbreaking utility that'll change the game forever. But how many of them actually deliver on that hype?
The secret way to sell pi coins effortlessly.DOT TECH
Well as we all know pi isn't launched yet. But you can still sell your pi coins effortlessly because some whales in China are interested in holding massive pi coins. And they are willing to pay good money for it. If you are interested in selling I will leave a contact for you. Just what'sapp this number below. I sold about 3000 pi coins to him and he paid me immediately.
+12349014282
Lecture slide titled Fraud Risk Mitigation, Webinar Lecture Delivered at the Society for West African Internal Audit Practitioners (SWAIAP) on Wednesday, November 8, 2023.
This presentation poster infographic delves into the multifaceted impacts of globalization through the lens of Nike, a prominent global brand. It explores how globalization has reshaped Nike's supply chain, marketing strategies, and cultural influence worldwide, examining both the benefits and challenges associated with its global expansion.
PPrreesseenntteedd bbyy:: GGrroouupp 66
GGlloobbaalliizzaattiioonn
o f
PP
oo
ll
yy
ee
ss
tt
ee
rr
RR
uu
bb
bb
ee
rr
EE
tt
hh
yy
ll
ee
nn
ee
VV
ii
nn
yy
ll
AA
cc
ee
tt
aa
tt
ee
GG
ee
nn
uu
ii
nn
ee
LL
ee
aa
tt
hh
ee
rr
SS
yy
nn
tt
hh
ee
tt
ii
cc
LL
ee
aa
tt
hh
ee
rr
CC
oo
tt
tt
oo
nn
C
o
u
n
t
r
i
e
s
I
n
v
o
l
v
e
d
Ni
k
e
h
a
s
m
o
r
e
t
h
a
n
7
0
0
s
h
o
p
s
i
n
c
o
n
t
r
a
c
t
w
i
t
h
w
o
r
l
d
w
i
d
e,
w
h
e
r
e
i
n
t
h
e
i
r
offi
c
e
s
a
n
d
i
n
d
e
p
e
n
d
e
n
t
fa
c
t
o
r
y
o
u
t
l
e
t
s
a
r
e
fo
u
n
d
w
i
t
h
i
n
t
h
e
p
r
e
m
i
s
e
s
of
ap
p
r
o
x
i
m
a
t
e
l
y
4
5
c
o
u
n
t
r
i
e
s.
AAuussttrraalliiaa
China
India
IInnddoonneessiiaa
TThhaaiillaanndd
TTuurrkkeeyy
USA
VViieettnnaamm
NNiikkee SSuuppppllyy CChhaaiinn
RRuubbbbeerr,, FFaabbrriicc
aanndd ootthheerr rraaww
mmaatteerriiaallss
Shoe
MMaannuuffaaccttuurriinngg
aanndd AAsssseemmbbllyy
MMaarrkkeettiinngg
SSppoorrttiinngg ggooooddss,,
ddeevveellooppmmeenntt
aanndd SShhooee ssttoorreess
OOnnlliinnee,, CCaattaalloogg
aanndd ootthheerr rreettaaiill
NNiikkee bbrraannddeedd
shoes
PPrroodduucctt
ddeevveellooppmmeenntt
CCuussttoommeerr nneeeeddss//wwaannttss ffeeeeddbbaacckk
NNiikk
Nike Supply Chain
Globalization of Nike
Nike Manufacturing Process
Rubber Materials Nike
Ethylene Vinyl Acetate Nike
Genuine Leather Nike
Synthetic Leather Nike
Cotton in Nike Apparel
Nike Shops Worldwide
Nike Manufacturing Countries
Cold Cement Assembly Nike
3D Printing Nike Shoes
Nike Product Development
Nike Marketing Strategies
Nike Customer Feedback
Nike Distribution Centers
Automation in Nike Manufacturing
Nike Consumer Direct Acceleration
Nike Logistics and Transport
Abhay Bhutada Leads Poonawalla Fincorp To Record Low NPA And Unprecedented Gr...Vighnesh Shashtri
Under the leadership of Abhay Bhutada, Poonawalla Fincorp has achieved record-low Non-Performing Assets (NPA) and witnessed unprecedented growth. Bhutada's strategic vision and effective management have significantly enhanced the company's financial health, showcasing a robust performance in the financial sector. This achievement underscores the company's resilience and ability to thrive in a competitive market, setting a new benchmark for operational excellence in the industry.
STREETONOMICS: Exploring the Uncharted Territories of Informal Markets throug...sameer shah
Delve into the world of STREETONOMICS, where a team of 7 enthusiasts embarks on a journey to understand unorganized markets. By engaging with a coffee street vendor and crafting questionnaires, this project uncovers valuable insights into consumer behavior and market dynamics in informal settings."
Understanding how timely GST payments influence a lender's decision to approve loans, this topic explores the correlation between GST compliance and creditworthiness. It highlights how consistent GST payments can enhance a business's financial credibility, potentially leading to higher chances of loan approval.
5 Tips for Creating Standard Financial ReportsEasyReports
Well-crafted financial reports serve as vital tools for decision-making and transparency within an organization. By following the undermentioned tips, you can create standardized financial reports that effectively communicate your company's financial health and performance to stakeholders.
how to sell pi coins effectively (from 50 - 100k pi)DOT TECH
Anywhere in the world, including Africa, America, and Europe, you can sell Pi Network Coins online and receive cash through online payment options.
Pi has not yet been launched on any exchange because we are currently using the confined Mainnet. The planned launch date for Pi is June 28, 2026.
Reselling to investors who want to hold until the mainnet launch in 2026 is currently the sole way to sell.
Consequently, right now. All you need to do is select the right pi network provider.
Who is a pi merchant?
An individual who buys coins from miners on the pi network and resells them to investors hoping to hang onto them until the mainnet is launched is known as a pi merchant.
debuts.
I'll provide you the what'sapp number.
+12349014282
how to swap pi coins to foreign currency withdrawable.DOT TECH
As of my last update, Pi is still in the testing phase and is not tradable on any exchanges.
However, Pi Network has announced plans to launch its Testnet and Mainnet in the future, which may include listing Pi on exchanges.
The current method for selling pi coins involves exchanging them with a pi vendor who purchases pi coins for investment reasons.
If you want to sell your pi coins, reach out to a pi vendor and sell them to anyone looking to sell pi coins from any country around the globe.
Below is the what'sapp information for my personal pi vendor.
+12349014282
how to swap pi coins to foreign currency withdrawable.
7 central banks
1. Money, Banking and Financial Markets
Central Banks
Chahir Zaki
Cairo University
July, 2011
Chahir Zaki (Cairo University) Money, Banking and Financial Markets July, 2011 1 / 28
2. 1 The Task of the Central Bank
2 The Aim of Central Bank Policy
3 Central Bank Independence
4 Instruments of Monetary Policy
5 The Egyptian Case
Chahir Zaki (Cairo University) Money, Banking and Financial Markets July, 2011 2 / 28
3. Outline
1 The Task of the Central Bank
2 The Aim of Central Bank Policy
3 Central Bank Independence
4 Instruments of Monetary Policy
5 The Egyptian Case
Chahir Zaki (Cairo University) Money, Banking and Financial Markets July, 2011 3 / 28
4. What is a Central Bank
The central bank is an organization of the state. According to textbooks
the central bank is
the monopoly of supplying the national currency;
the lender of last resort;
the bank of the state;
the operator of the payments system of the country.
Chahir Zaki (Cairo University) Money, Banking and Financial Markets July, 2011 4 / 28
5. Tasks of the Central Bank
to issue currency;
to supervise banks;
to define and implement monetary policy;
to conduct foreign exchange operations;
to hold and manage official gold and foreign exchange reserves;
to promote the smooth operation of the payments system;
to compile and publish monetary statistics of the economy.
Chahir Zaki (Cairo University) Money, Banking and Financial Markets July, 2011 5 / 28
6. Outline
1 The Task of the Central Bank
2 The Aim of Central Bank Policy
3 Central Bank Independence
4 Instruments of Monetary Policy
5 The Egyptian Case
Chahir Zaki (Cairo University) Money, Banking and Financial Markets July, 2011 6 / 28
7. Objectives of Monetary Policy
The main objective of monetary policy is to keep the price level
stable. Why?
In an economy where money is used as a medium of exchange, the
following identity holds. M × vM = P × T where M money supply,
vM velocity of money, P average price of a transaction, T number of
transactions (per year).
Chahir Zaki (Cairo University) Money, Banking and Financial Markets July, 2011 7 / 28
8. Objectives of Monetary Policy
The quantity theory of money can be developed from the previous identity
adding some assumptions:
The number of transactions is determined by the level of income and
production in the economy. Thus, T can be replaced by Yr which is
the real GDP. The velocity of money, vM , then becomes the income
velocity of money, v
The income velocity of money is constant (v = v ).
¯
Real GDP is determined by real variables only (e.g. availability of
production factors, production technology). These determinants are
rather stable in the short run. Yr is also constant in the short run
¯
(Yr = Yr ).
M × v = P × Yr
¯ ¯
Chahir Zaki (Cairo University) Money, Banking and Financial Markets July, 2011 8 / 28
9. Objectives of Monetary Policy
The central bank and monetary policy An important finding from the
quantity theory of money is that a change in money supply leads to a
corresponding percentage change in the price level. Thus the
organization that can control money supply should be in charge for
keeping the price level stable. This is the central bank.
Accordingly any change in money supply will lead in the long run only
to a corresponding change in the price level. No other variable will be
affected.
This relation between money supply and the price level is why many
central banks in charge for price stability carefully observe changes in
money supply.
Chahir Zaki (Cairo University) Money, Banking and Financial Markets July, 2011 9 / 28
10. Outline
1 The Task of the Central Bank
2 The Aim of Central Bank Policy
3 Central Bank Independence
4 Instruments of Monetary Policy
5 The Egyptian Case
Chahir Zaki (Cairo University) Money, Banking and Financial Markets July, 2011 10 / 28
11. Why Central Bank Independence?
The central bank is in charge for monetary policy. The aim of
monetary policy is to keep inflation low.
Keeping actual inflation low can be successful only when the central
bank manages to keep the expected rate of inflation low.
People expect the rate of inflation to be low only, when decision
makers about monetary policy cannot gain from setting monetary
policy so that inflation will be high.
Borrowers gain from high inflation as inflation reduces the real burden
of servicing debt.
The government is the biggest debtor in the country. Thus the
government gains from inflation.
A central bank which is not independent from the government will
find it hard to keep inflation low.
Chahir Zaki (Cairo University) Money, Banking and Financial Markets July, 2011 11 / 28
12. Why Central Bank Independence?
Politicians lack expertise about the complex relation between
monetary policy, inflation and financial stability. Both a stable price
level and financial stability are too important to leave it to people
lacking expertise.
Political business cycles may emerge when politicians in power
(ab)use monetary policy before an election to make people reelect
them.
Counterargument to central bank independence: In a democracy,
a powerful organization such as the central bank, should be under
democratic control. An independent central bank may conduct
monetary policy too ignorant to other aims of public policy.
Chahir Zaki (Cairo University) Money, Banking and Financial Markets July, 2011 12 / 28
13. Elements of the Central Bank Independence
Institutional independence: the central bank is an organization by
itself (not a department of another institution).
Personal independence: members of the monetary council must not
be affiliated to any other institution.
Goal independence: Ability of the central bank to set the goals of
monetary policy.
Instrumental independence: Ability of the central bank to set
monetary policy instruments.
Financial independence: the budget of the central bank is not to be
approved by any other authority.
Chahir Zaki (Cairo University) Money, Banking and Financial Markets July, 2011 13 / 28
14. Outline
1 The Task of the Central Bank
2 The Aim of Central Bank Policy
3 Central Bank Independence
4 Instruments of Monetary Policy
5 The Egyptian Case
Chahir Zaki (Cairo University) Money, Banking and Financial Markets July, 2011 14 / 28
15. Instruments of Monetary Policy
The instruments of monetary policy used by the Central Bank depend on
the level of development of the economy, especially its financial sector.
They are classified as follows:
Reserve Requirement: The Central Bank may require Deposit
Money Banks to hold a fraction (or a combination) of their deposit
liabilities (reserves) as vault cash and or deposits with it. Fractional
reserve limits the amount of loans banks can make to the domestic
economy and thus limit the supply of money.
Open Market Operations: The Central Bank buys or sells ((on
behalf of the Fiscal Authorities (the Treasury)) securities to the
banking and non-banking public (that is in the open market). One
such security is Treasury Bills. When the Central Bank sells securities,
it reduces the supply of reserves and when it buys (back) securities-by
redeeming them-it increases the supply of reserves to the Deposit
Money Banks, thus affecting the supply of money.
Chahir Zaki (Cairo University) Money, Banking and Financial Markets July, 2011 15 / 28
16. Instruments of Monetary Policy
Lending by the Central Bank: The Central Bank sometimes
provide credit to Deposit Money Banks, thus affecting the level of
reserves and hence the monetary base.
Exchange Rate: The balance of payments can be in deficit or in
surplus and each of these affect the monetary base, and hence the
money supply in one direction or the other. By selling or buying
foreign exchange, the Central Bank ensures that the exchange rate is
at levels that do not affect domestic money supply in undesired
direction, through the balance of payments and the real exchange
rate. The real exchange rate when misaligned affects the current
account balance because of its impact on external competitiveness.
Discount Rate:
Chahir Zaki (Cairo University) Money, Banking and Financial Markets July, 2011 16 / 28
17. Outline
1 The Task of the Central Bank
2 The Aim of Central Bank Policy
3 Central Bank Independence
4 Instruments of Monetary Policy
5 The Egyptian Case
Chahir Zaki (Cairo University) Money, Banking and Financial Markets July, 2011 17 / 28
18. The Egyptian Case: Objectives
Egypt’s Monetary Policy Objective Law No. 88 of 2003 of the “Central
Bank, Banking Sector and Monetary System”: entrusts the Central Bank
of Egypt (CBE) with the formulation and implementation of monetary
policy, with price stability being the primary and overriding objective. The
CBE is committed to achieving, over the medium term, low rates of
inflation which it believes are essential for maintaining confidence and for
sustaining high rates of investment and economic growth. The
Government’s commitment to fiscal discipline is important to achieve this
objective.
Chahir Zaki (Cairo University) Money, Banking and Financial Markets July, 2011 18 / 28
19. The Egyptian Case: Interest Rates
What is the Interest Rate Corridor? On June 2, 2005 the CBE
introduced an interest rate corridor, two standing facilities, the
overnight lending and the overnight deposit facility. The interest rates
on the two standing facilities, the overnight lending and the overnight
deposit rates, define the ceiling and floor of the corridor, respectively.
By setting the rates on the standing facilities, the MPC determines
the corridor within which the overnight rate can fluctuate. Effectively,
steering the overnight inter-bank rate within this corridor is the
operational target of the CBE.
What are the merits of the Corridor? Since the corridor was
introduced in June 2005, volatility in the overnight inter-bank rate
declined significantly.
Who decides on the Corridor? The Monetary Policy Committee
(MPC) decides on the corridor rates.
Chahir Zaki (Cairo University) Money, Banking and Financial Markets July, 2011 19 / 28
20. The Egyptian Case: MPC
What is the Monetary Policy Committee (MPC)? Monetary
policy decisions are taken by the CBE’s Monetary Policy Committee
(MPC), which consists of nine members comprising of the Governor
of the CBE, the two Deputy Governors, and six members of the Board
of Directors.
How often does the MPC meet? The MPC convenes on Thursday
every six weeks. The annual schedule of the MPC meetings is posted
on the CBE’s web-page at “Monetary Policy¿Monetary Policy
Decisions¿MPC Meeting Schedule”
Chahir Zaki (Cairo University) Money, Banking and Financial Markets July, 2011 20 / 28
21. The Egyptian Case: MPC
How does the MPC decide on the interest rate? The Monetary
Policy Department prepares briefing material for the MPC ahead of
each meeting. This material is analytical in content and focuses on
both domestic and international developments.
On the domestic front, the following variables are monitored: inflation,
interest rates, monetary and credit developments, asset prices, and the
real sector variables. Moreover, inflation forecasts based on the CBE’s
forecasting models are presented every quarter.
On the external side, several variables are examined closely, including
global growth, global interest rates, international commodity prices,
global inflation, in addition to many other variables.
Does the MPC justify its policy actions? Yes, the CBE publishes
a press release after each MPC. It is accessible at “Monetary
policy¿Monetary Policy Decisions¿MPC Press Releases”
Chahir Zaki (Cairo University) Money, Banking and Financial Markets July, 2011 21 / 28
22. The Egyptian Case: Inflation
What is meant by the consumer price index (CPI)? It is a price
index, published by the Central Agency for Public Mobilization and
Statistics (CAPMAS) every month on www.capmas.gov.eg, capturing
weighted price movements of consumer goods and services which
constitute a representative “consumption basket” purchased by
households. The weights in the basket reflect the relative importance
of the goods and services in the household consumption basket based
on the Household Expenditure Survey, which is carried out by
CAPMAS every five years. This index is commonly referred to as the
headline CPI.
Chahir Zaki (Cairo University) Money, Banking and Financial Markets July, 2011 22 / 28
23. The Egyptian Case: Inflation
What is meant by headline CPI inflation? It is a general increase
in the price level of consumer goods and services contained in the
household consumption basket over time. While the annual inflation
rate captures the inflation story over the whole year, the monthly
inflation rate contains the most recent developments.
What is meant by core CPI inflation? And how is it different from
the headline CPI inflation? Core CPI is a variant of the headline CPI
that excludes the impact of temporary price shocks on inflation that
could result for various reasons, including weather conditions, supply
disruptions or infrequent resetting of prices by the government.
Does the core inflation measure replace the headline measure?
No, the core measure is derived from the headline and is used as a
complementary indictor, mainly to distinguish the underlying trend of
the inflation rate from its transitory movements.
Chahir Zaki (Cairo University) Money, Banking and Financial Markets July, 2011 23 / 28
24. The Egyptian Case: Inflation
Why use core inflation measure? Temporary and sudden
movements in the prices of some CPI components cause the headline
inflation rate to experience sharp fluctuations. The volatility caused
by temporary price shocks can make it difficult for policymakers to
accurately distinguish between price changes that are likely to be
persistent which, in turn, have implications for future inflation trends,
and those which are temporary. The core measure provides a mean by
which the monetary authority can separate the noise and short-run
fluctuations in the incoming data from the more persistent trend
which provides signals about current and future inflation. By timely
communicating the core inflation measure, the CBE aims to improve
the public’s understanding of the inflation dynamics. This is expected
to reduce the pass-through of temporary price shocks to inflation
expectations and, in turn, minimize the variability in inflation.
Chahir Zaki (Cairo University) Money, Banking and Financial Markets July, 2011 24 / 28
25. ercent (m/m) in May. The annual rate inched up to 8.94 per‐
The Egyptian Case: Inflation
Meanwhile, retail prices witnessed a marginal increase while
Headline and Core CPI Inflation 1/
25.0 (year-on-year percentage change ) 25.0
20.0 20.0
15.0 15.0
10.0 10.0
5.0 5.0
Headline CPI - All Items (100%)
Core CPI excl. regulated items, fruits & vegetables (74.43%)
0.0 0.0
Jun-07
Aug-07
Oct-07
Dec-07
Feb-08
Apr-08
Jun-08
Aug-08
Oct-08
Dec-08
Feb-09
Apr-09
Jun-09
Aug-09
Oct-09
Dec-09
Feb-10
Apr-10
Jun-10
Aug-10
Oct-10
Dec-10
Feb-11
Apr-11
Jun-11
Jun-11
Source: CAPMAS and the CBE
Contributions to Monthly Headline CPI Inflation
(in percent)
Chahir Zaki (Cairo University)
3.0 Money, Banking and Financial Markets July, 2011 25 / 28
26. Central Bank of Egypt
The Egyptian Case: Inflation
Monthly Inflation Developments
Table 2.
Consumer Price Index and Major Components 1/
Weight in June 2011 to May June 2011 to June
June 2010 June 2011
basket 2/ 2011 2010
(in percent) (index) (percentage change)
(January 2010 = 100)
Headline - All items 100.00 102.44 114.51 0.42 11.79
Food and beverages 39.92 105.86 126.01 0.13 19.03
Tobacco and related products 2.19 100.00 169.86 10.16 69.86
Clothing and footwear 5.41 100.00 102.23 0.42 2.23
Housing, water, electricity, gas and other
fuels 18.37 99.30 100.42 0.00 1.12
Furnishings, household equipment and
routine maintenance of the dwelling 3.77 102.60 105.16 0.25 2.50
Medical care 6.33 100.00 101.93 0.00 1.93
Transportation 5.68 100.65 101.66 0.00 1.00
Communications 3.12 99.87 99.99 -0.04 0.12
Recreation and Culture 2.43 102.38 108.42 0.56 5.90
Education 4.63 100.00 124.31 0.00 24.31
Hotels, cafes and restaurants 4.43 100.23 112.37 0.00 12.11
Miscellaneous goods and services 3.73 100.70 103.15 0.55 2.44
Selective aggregates
Fruits & vegetables 3/ 6.90 108.91 150.20 -2.30 37.92
Regulated items 18.66 99.59 112.49 1.66 12.95
Food excl. fruits & vegetables 31.08 105.55 122.07 0.82 15.65
Chahir Zaki (Cairo items
Retail University) Money, Banking and Financial Markets
14.48 101.05 103.76 0.35 July, 2011
2.68 26 / 28
28. References
Mishkin, chapter 4.
The Central Bank of Egypt website.
Chahir Zaki (Cairo University) Money, Banking and Financial Markets July, 2011 28 / 28