Question

What are the monetary policy strategies in emerging market and advanced economies during and after the recent global financial crisis.

Answer 1

Current world is facing a depression state where the economic facilities across the globe a sinking to a low which is due to shutting down of most of the activities which kept the world going. The interlinking and connections brought the world closer and made every effective facilities dependent on each other. Since the world is going through the pandemic, the world Economies , be it small or big , are suffering.

Foreseeing the impacts of shutting economies , the Govts across the world are trying to recover the falling economies by giving both fiscal and monetary push. Fiscal policies are direct and burden of taxes is reduced off of the citizens. The implications of fiscal policies is direct .

The more long term and deep seeping impacts are focused through the revival techniques with monetary policies. Monetary policies tend to readjust the nature of the working economy.

The current Economies are working towards monetary policy like reduction of rate on interests. This policy tend to encourage the citizens to invest the money rather than saving it. This stimulats the economy. Due to high investment there is generation of employment and hence the economy can revive from the slump it is undergoing.

In addition the govt is buying market bonds to further elevate the levels of money supply in the economy. Not just this, the additional rate of interest paid on the bond is income for the sector involved.

Finally interet rates on FDI are also reduced in order to invite new businesses in the country, the effects of which will start more efficiently once the Economy is back on track after the pandemic.