Institutions:
Introduction
Central banks play a crucial role in stabilizing an economy. That is through the application of monetary policy tools that controls money supply. In that view; the bank can apply the tools to address economic problems in different business cycles. To analyze the tools application, this essay seeks to demonstrate how the bank applies the tools and their application in the modern financial systems. That is achieved with reference to the UK banking system that is assumed to have ability to supply money by relying on liabilities. That would satisfy the increase or decrease in loan demand to
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