Monetary authority

In finance and economics, a monetary authority is the organization which controls the money supply of a currency. Their goal is to control inflation, interest rates, real GDP or the unemployment rate. With its monetary tools, a monetary authority is able to effectively influence the development of short-term interest rates for that currency. However, they can also influence other things which control the cost and availability of money.

A monetary authority is usually a central bank or currency board. Central banks usually have a some independence from the government and its political decisions. However, depending on the political set-up, governments can sometimes have almost total control over monetary policy if they are allowed to influence or control their central bank.

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Category:Currency