Question - Practical Applications: The Central banks can influence a country's economy by solely varying interest rates. How?
Policy Notebook: In a globalised economy, these policies need to be coordinated and cooperated with other countries before implementation. How do these two functions work in practice? Explain how allowing foreign banks to enter and compete in the domestic financial sector might improve capital market allocations.
Explain how, in general, competition among financial intermediaries is important to financial stability.
Explain how savers and borrowers might benefit from regulation of a nation's financial intermediaries. Does regulation impose costs? How do these costs affect long-run economic development?