Monetary authority is a generic term in
financeFinance is the science of funds management. The general areas of finance are business finance, personal finance, and public finance. Finance includes saving money and often includes lending money. The field of finance deals with the concepts of time, money and risk and how they are interrelated...
and
economicsEconomics is the social science that studies the production, distribution, and consumption of goods and services. The term economics comes from the Ancient Greek from + , hence "rules of the house"...
for the entity which controls the
money supplyIn economics, money supply or money stock, is the total amount of money available in an economy at a particular point in time. There are several ways to define "money", but standard measures usually include currency in circulation and demand deposits....
of a given
currencyIn economics, the term currency can refer either to a particular currency, for example the US dollar, or to the coins and banknotes of a particular currency, which comprise the physical aspects of a nation's money supply...
, and has the right to set interest rates, and other parameters which control the cost and availability of money. Generally a monetary authority is a
central bankA central bank, reserve bank, or monetary authority is a banking institution granted the exclusive privilege to a lend a government its currency...
, though often the executive branch of a government has de facto control over monetary policy by controlling the central bank. There are other arrangements, for example a central bank for several nations, a
currency boardA currency board is a monetary authority which is required to maintain a fixed exchange rate with a foreign currency. This policy objective requires the conventional objectives of a central bank to be subordinated to the exchange rate target....
which restricts currency issuance to the amount of another currency or
free bankingFree banking is a theory of banking in which market forces control the provision of banking services, where there is no central bank to protect commercial banks from bank runs and where money production is unregulated by government...
where a broad range of entities can issue notes or coin.
Discussion
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Monetary authority is a generic term in
financeFinance is the science of funds management. The general areas of finance are business finance, personal finance, and public finance. Finance includes saving money and often includes lending money. The field of finance deals with the concepts of time, money and risk and how they are interrelated...
and
economicsEconomics is the social science that studies the production, distribution, and consumption of goods and services. The term economics comes from the Ancient Greek from + , hence "rules of the house"...
for the entity which controls the
money supplyIn economics, money supply or money stock, is the total amount of money available in an economy at a particular point in time. There are several ways to define "money", but standard measures usually include currency in circulation and demand deposits....
of a given
currencyIn economics, the term currency can refer either to a particular currency, for example the US dollar, or to the coins and banknotes of a particular currency, which comprise the physical aspects of a nation's money supply...
, and has the right to set interest rates, and other parameters which control the cost and availability of money. Generally a monetary authority is a
central bankA central bank, reserve bank, or monetary authority is a banking institution granted the exclusive privilege to a lend a government its currency...
, though often the executive branch of a government has de facto control over monetary policy by controlling the central bank. There are other arrangements, for example a central bank for several nations, a
currency boardA currency board is a monetary authority which is required to maintain a fixed exchange rate with a foreign currency. This policy objective requires the conventional objectives of a central bank to be subordinated to the exchange rate target....
which restricts currency issuance to the amount of another currency or
free bankingFree banking is a theory of banking in which market forces control the provision of banking services, where there is no central bank to protect commercial banks from bank runs and where money production is unregulated by government...
where a broad range of entities can issue notes or coin.
See also
- Central bank
A central bank, reserve bank, or monetary authority is a banking institution granted the exclusive privilege to a lend a government its currency...
- deflation
- fiat money
Fiat money is money declared by a government to be legal tender. The term derives from the Latin fiat, meaning "let it be done". Fiat money achieves value because a government demands it in payment of taxes and says it should be used within the country as a "tender" to pay all debts...
- gold standard
The gold standard is a monetary system in which a region's common medium of exchange are paper notes that are normally freely convertible into pre-set, fixed quantities of gold...
- hyper-inflation
- inflation
In economics, inflation is a rise in the general level of prices of goods and services in an economy over a period of time.When the price level rises, each unit of currency buys fewer goods and services; consequently, inflation is also an erosion in the purchasing power of money – a loss of real...
- monetarism
Monetarism is the view within monetary economics that variation in the money supply has major influences on national output in the short run and the price level over longer periods and that objectives of monetary policy are best met by targeting the growth rate of the money supply.Monetarism today...
- seignorage