The role of central banks is critical in managing monetary policy and exchange rates from "summary" of International Financial Management, Abridged Edition by Jeff Madura
Central banks play a crucial role in the management of monetary policy and exchange rates. They are responsible for making decisions that influence the supply of money in the economy, which in turn affects interest rates, inflation, and economic growth. By adjusting interest rates, central banks can control the cost of borrowing, which can stimulate or slow down economic activity. Central banks also play a key role in maintaining exchange rate stability. They can intervene in foreign exchange markets to infl...
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