Economics question on Central Bank?


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In their task of managing the money supply, central bank officials face serious challenges. Explain three or four of them!!! HELP ME PLEASE!


Answer (2):

CSI - Economics

Really not.
Managing money supply is too easy...
There is enough theoretic base
There is technology capacity
There is enough human resource
There is regulations...

This is rare in an economy field...but it is true...Maybe it is because usually an official of Central Bank is well paid, so this kind of institutions receive many talents...

We can measure the efficient of Central Bank by the inflation rate present in the economy...find an economy with high inflation rate and you have a Central Bank with problem to managing money supply and serious challenges...

Supposing an economy with high inflation...usually a Central Bank must be focused in:
.- To strong procedures to get and calculate national statistics
.- Clean the mechanisms oriented to alter the money supply
.- Consolidate the power to action on financial system
.- Autonomy, no one can question the decisions of Central Bank in monetary policy matter.

The reality shows a big numbers of countries in the world had reached low inflation rate thanks to Central Banks, in this context the challenges would be:
.- Contain any threatens to Central Bank autonomy...
.- Contain the polical pressures oriented to distort the statistics that measure the macroeconomics results
.- Mantain academic and operations updates.
.- To know how to adapt the monetary mechanism to the new financial products and the new technologies.
.- To know how to combat academic and operations fraud.
.- Prepare "system of alert" to detect situations can go the institutions to non-optimal functioning

umar z

There are many question which can ask on central bank i.e.

 When the officer faces the problem of Inflation in economy, what is there policy to control it?
 How the Central Bank control the money supply with using the monetary policy?
 When Central Bank use the Open Market Operation?
 How the Central Bank try to help the Government to cover the Budget Deficit?