Monetary Policy

Monetary policy refers to the actions undertaken by a nation's central bank to manage the money supply and credit conditions to foster price stability and maximum employment. This is achieved primarily through tools like setting benchmark interest rates, conducting open market operations to influence liquidity, and establishing bank reserve requirements. By influencing the cost and availability of money, these actions directly impact borrowing costs for businesses and consumers, influence the behavior of financial markets, and steer the overall economic activity, making it a critical factor in financial planning and corporate strategy.

1. Introduction to Monetary Policy
   1. Defining Monetary Policy
      1. Definition and Scope
      2. Distinction from Fiscal Policy
      3. Historical Evolution of Monetary Policy
   2. The Role of Money in an Economy
      1. Functions of Money
         1. Medium of Exchange
         2. Unit of Account
         3. Store of Value
         4. Standard of Deferred Payment
      2. Properties of Money
         1. Durability
         2. Portability
         3. Divisibility
         4. Uniformity
         5. Limited Supply
         6. Acceptability
      3. Types of Money
         1. Commodity Money
         2. Representative Money
         3. Fiat Money
         4. Digital Money
      4. Measuring the Money Supply
         1. M0 (Monetary Base)
            1. Definition and Components
            2. Currency in Circulation
            3. Bank Reserves
            4. Central Bank Money vs. Commercial Bank Money
         2. M1
            1. Definition and Components
            2. Currency in Circulation
            3. Demand Deposits
            4. Other Checkable Deposits
            5. Relationship to M0
         3. M2
            1. Definition and Components
            2. M1 Components
            3. Savings Deposits
            4. Time Deposits
            5. Money Market Mutual Funds
         4. Broader Measures
            1. M3
            2. L (Liquid Assets)
            3. Other National Variations
         5. Money Multipliers
            1. Simple Money Multiplier
            2. Complex Money Multiplier
            3. Calculation and Interpretation
            4. Factors Affecting the Multiplier
            5. Reserve Ratio
            6. Currency-to-Deposit Ratio
            7. Excess Reserves Ratio
   3. The Concept of a Central Bank
      1. Definition and Purpose
      2. Historical Development of Central Banks
         1. Early Central Banks
         2. Evolution of Modern Central Banking
         3. Lessons from Banking Crises
      3. Key Responsibilities
         1. Banker to the Government
            1. Managing Government Accounts
            2. Issuing Government Debt
            3. Fiscal Agent Services
         2. Banker to Commercial Banks
            1. Lender of Last Resort
            2. Clearing and Settlement Services
            3. Payment System Oversight
         3. Regulator of the Financial System
            1. Prudential Supervision
            2. Macroprudential Regulation
            3. Financial Stability Monitoring
         4. Manager of the Money Supply
            1. Currency Issuance
            2. Conducting Monetary Policy Operations
            3. Reserve Management