This website uses cookies to ensure you have the best experience. Learn more

Independent Bank Essay

1891 words - 8 pages

The first central bank has run since 17th century and it made lots of advantage in country’s economics. However nowadays, there are some type of central bank, each type of central bank having both advantage and disadvantage for example: independent central bank, dependent central bank, and half-independent central other ways. Based on their government type, a central bank was chosen suitable for purpose of country. All kind of central bank must control the money supply as managing the interest rate, lender of last resort for commercial bank and reserve requirement and also prevent bank run as well as bad activity or lack of responsible of financial institution of each country. In this paper we will discuss on what an independent central bank is and how independent bank can affect the policy outcome.
Firstly, we should what is the definition of independent, central bank and how to measure the independence of central bank. An independent bank is free to bring out the monetary policy without intervening of government (Howells). For more detail, there are some types of independent: independent in goal, operation, legal and management, but independent in goal and operation are the most important. Independent in goal, central bank has authority for setting its own goal, which is inflation target, money supply as well as balances the fixed exchange rate. In other side, independent in operation, central bank can chose which instrument is suitable for them to reaching the inflation target. In this essay I will concern about two type of independent central bank: half-independent central bank and full independent central bank.
A half independent central bank is which government set the goal for economy, then the central bank just only deicide which instrument should they used. A typical example of half-independent bank is bank of England. The government of England set inflation target after balanced benefit between unemployment rate and inflation. Bank of England only can decide what instrument that they want to used. To more illustrated, two main goal which government set up for bank of England are monetary stability and financial stability (Annual Report 2013 - The Bank’s strategic priorities in 2013/14, 2013) . Furthermore, central bank of England set some strategy for the former goal of government is: restraining the inflation under government 2% target by reaction effectively and decisively to reduce risk from crisis by European debt in order to guarantee the inflation target of Her Majesty’s Government, promote the macroeconomic by raising bank’s understanding, calculating the impact of unconventional monetary policy as well as balanced between monetary policy and macro policy (between unemployment and inflation rate) (Annual Report 2013 - The Bank’s strategic priorities in 2013/14, 2013). The later gold for them is financial stability so they making up 4 main strategy to achieving the second target are: maintaining the stability and promote...

Find Another Essay On independent bank

Measures Taken by the Current Labour Government to Enhance the Independence of the Bank of England

3270 words - 13 pages have the authority to give instructions to the Bank on interest rates for a limited period. This policy of partial delegation of monetary policy is supported by Lohmann (1992) who believes it to yield superior outcomes, when the government is able to override the central bank at a positive cost. But this does limit how independent the Bank can be, if there is the possibility of government interference. Along with the

World Bank Essay

1191 words - 5 pages autonomy, it is systematically subject to the influence of states. Realists place a lot of emphasis on power, and ultimately believe that international institutions have little independent impact and argue that their influence is derived from the actions of the states within them. Realists, such as Robert Gilpin, believe that many international institutions such as the World Bank, are controlled by the hegemonic states, and thus reflect the states


1667 words - 7 pages 1.0 Overview of Study This study is examines the empirical relationship and effect between liquidity risk and profitability performance in Malaysia banking industry. Liquidity risk is an important aspect of the banking risks. This riskiness of its portfolio and operations usually will straightforwardly vary a bank’s profitability. According to Matthews and Thompson (2008), liquidity risk refers to the likelihood inability of a bank to convene


766 words - 4 pages independent credit rating agency which should evaluate the financial capacity of the borrower before providing credit facility. • The priority sector lending bench mark of 40 percent of net bank credit should be redefined as it involves more risk and less return.

A case study on business ethics performed by Triodos Bank. -Ethical banking-

1835 words - 7 pages business working for social renewal.Triodos Bank includes social and ethical -as well as financial -perspectives in its business practices. This threefold approach is the source of the name Triodos 'tri hodos ' which means 'threefold way '. As an independent international financial institution, Triodos Bank seeks to bringSubstance to ethical and social banking. Within the framework of our clear social objectives, Triodos Bank strives to make a

Regulation of Banking and Financial Services

1525 words - 6 pages . Horton, B. J. (2012). When does a non-bank financial company pose a “systemic risk”? A proposal for clarifying Dodd-Frank. Journal of Corporation Law, 37(4), 815–848. Morris, C. S. (2011). What should banks be allowed to do? Economic Review - Federal Reserve Bank of Kansas City, 55–80. Rose, P. S., & Hudgins, S. C. (2013). Bank Management & Financial Services (9th ed.). New York: The McGraw-Hill Companies, Inc. Smith, R. C. (2011). The dilemma of bailouts. The Independent Review, 16(1), 15–26. Tasto, M. T., & Randolph, G. M. (2011). Proposed Solutions to the FDIC Deposit Insurance Fund. Review of Business, 32(1), 120–124.

Government and Industry

916 words - 4 pages so that it would become the industry in the current United States. Who would cultivate the industry? Rather than a single body or entity, numerous factors resulted in the growth of industry. In the 19th century, the growth of an industry can be attributed to the availability of financing spurred by protective tariffs, the Bank of the United States, a wealth of laborers, and economic expansion. The central government became instrumental in the

Sun National Bank's Fraud Cases

1831 words - 8 pages activities seem to be a promising “career” are the banks. The institutions for example in US lose approximately Sh.15.5 million on a daily basis in a multifaceted fraud, which has persistently threatened the growth of the banking sector. The shocking revelations by the independent analysts, as well as, the bank fraternity indicate that innovative fraudsters have now employed the uses of various advanced means to steal from banks. They use the most

Andrew Jackson: A Man for the People

615 words - 2 pages By today's standards Andrew Jackson could be considered a tyrant. In most issues he was solely interested in attaining power and crushing those who opposed him. In the Indian Removal Act Jackson argued that the Cherokees were not an independent nation, and therefore had to do as he said. Jackson’s interest in selling real estate was hypocritical since he supposedly hated the rich. Perhaps the key event was ignoring the Supreme Court order

India Banking System

1781 words - 7 pages India Banking SystemTerm PaperAn overview of Indian Financial SystemThe Indian financial system does not have an overarching regulator. Instead, it is regulated by several independent regulators in the sectors of banking, insurance, capital market and various service sectors. Reserve Bank of India (RBI), established in 1935 under the Reserve Bank of India Act, is the central bank that regulates Indian banking system. Insurance Development and

Globalization: A Form of Colonialism

1296 words - 5 pages , which continued to control over newly independent states following World War II. Globalization, a form of colonialism, maintained power for the system over states or regions through economic terms with the development of the World Bank, and its derivation of structural adjustments. This financial institution was formed and contributed to colonialism; it assisted in the economic affairs of colonized nation(s). Along with class, professor Manfred B

Similar Essays

Independent Bank Of England, Essay Topic: Significance Of The Indpendent Monetary Policy Comitee In The U.K. Over The Nation's Economy

839 words - 3 pages Independent Bank of England"Since 1997, the new government has been putting in the new framework to deliver the objectives of high and stable levels of employment, with these reforms, I believe that we now have a sound and credible platform for stability for the British economy for the first time in a generation." These were the words of Gordon Brown emphasizing the importance of the independent Bank of England and the macro-economic outcome s

Bank Essay

1763 words - 8 pages France, New Zealand, Spain, and the United Kingdom, enact law to make their own central banks more isolate from the government after witnessing the good practice of Germany and Switzerland. So far, the most independent central bank in term of conduction of monetary policy are the European Central Bank and Federal Reserve System in the United State. In this paper we would discuss about three crucial characteristics that lead to the success of an

The Extent To Which A Central Bank Should Have Both Goal And Instrument Independence And Examine The Possible Implication Of This On Achievement Of The Macro Economic Objectives

2118 words - 8 pages , using their influence over the money supply and interest rates to implement macroeconomic policies.The argument for a Central Bank independent of any government intervention is one that states Central Banks should be able to concentrate on the long term needs of an economy whereas political intervention may be guided by the short term needs of a government. Central Bank independence can be divided into two categories; Goal and instrument

What Advice Would You Give To Mark Carney, The New Governor Of The Bank Of England

2293 words - 10 pages ’. Published by Forgotten Books (1 July 2012) 3. Bagehot W (1896). ‘Lombard Street: A Description of the Money Market. ‘ Published by CreateSpace Independent Publishing Platform (October 3, 2013) 4. Bagehot W (1889). ‘The Works of Walter Bagehot: With Memoirs by R. H. Hutton’. 5. Bank of England (n.d). From 6. Sky news. (2014) ‘Bank of England Raises Growth Forecast By 21%’ Retrieved 12 of