Question

Review and critically evaluate arguments for and against both financial repression and financial liberation. Your answer should also review and discuss the case for financial integration.

Answer 1

Financial repression is all about formulating of all such monetary policy in such a way that controls the money flow and restrict the supply of money to a higher extent and it describes measure by government to channelize fund from private sector to themselves as a form of debt reduction.

Policy actions of financial repression will help the government in borrowing at low interest rate and obtaining low cost funding for the Government expenditures and it is highly focused at development of the public enterprises undermining the development of the private enterprises.

financial liberation is focused at liberating all this monetary policy to such an extent that government will provide relief to the private sector in operating and they will provide funds to the private sector at a low cost and they will help the private sector in borrowing at extremely low interest rate and obtaining low cost funding for private expenditure.

These type of financial integration will help in overall economy development and it will also help in management of the funds in overall economy in order to help foster growth.