Module_4 - Module 4 Learning Goals Learning Goals...

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Module 4
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± earning Goals Learning Goals Understand the importance of Monetary Policy now the Strategy that the Central Bank can Know the Strategy that the Central Bank can follow and the one followed by the European Central Bank (ECB) Know the different instruments available to the Central Banks. Understand how these instruments are applied and the importance of the discretional, dependent nature of the bank. independent nature of the bank. 2
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ontext ± Context You have passed the ECB selection process and will join the Frankfurt office next week. On your first day at work, you must give a presentation to your new bosses. To ensure you ake a success of it you have decided to make a success of it you have decided to refresh your knowledge of Monetary Policy. 3
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verview ± Overview Introduction The Cornerstones of Monetary Policy The Instruments of Monetary Policy Auctions and guarantees ettlement: Target2 Settlement: Target2 Credibility 4
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ontinuous Assessment ± Continuous Assessment Read and discuss the article on adapting Monetary Policy. 5
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Introducción
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Introduction ± The main aim of the ECB is to maintain price stability. Price stability shall be defined as a year-on-year increase in the armonised Index of Consumer Prices for the euro area of around 2%. Harmonised Index of Consumer Prices for the euro area of around 2%. Price stability is to be maintained over the medium term. ± ECB will do it through the management of Monetary Policy ± ECB is independent of Governments ± The management of Monetary Policy include all actions which aim fix control and improve financial stability and therefore interest to fix, control and improve financial stability and therefore interest rates, inflation, etc. with the ultimate aim of promoting economic growth. ± Price stability provides a series of clear benefits. It improves the decision criteria for company and consumer investment or pending allowing them to calculate prices variations spending, allowing them to calculate prices variations. Families' investment and savings decisions change according to interest rates and the economic climate.
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This note was uploaded on 02/03/2011 for the course ECON 101 taught by Professor Flora during the Spring '11 term at Universidad Carlos III de Madrid.

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Module_4 - Module 4 Learning Goals Learning Goals...

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