Central Bank¶

Monetary Policy¶

What is the difference between SLR and CRR? - Cash Reserve Ratio (CRR) is the percentage of money, which a bank has to keep with RBI in the form of cash. - Statutory Liquidity Ratio (SLR) is the proportion of liquid assets to time and demand liabilities.

Central bank checks fortnightly

Usually commercial banks have

• Short-term sources
• Long-term lending

Balance of payment

Unsterilized Intervention¶

Intervention without worrying about side-effects

Domestic currency is bought and foreign assets

Outflow of foreign assets

Stock Market¶

The main driver of stock market is monetary policy. This is primarily due to the resulting changes in the risk-free rate and hence, the opportunity cost.

Hence when the employment index increases, the stock market goes down, anticipating a monetary policy

Comments