MONETARY POLICY

Monetary Policy
± ³the management of the expansion and contraction of the volume of money in circulation for the explicit purpose of attaining a specific objective.´ y Broad point of view ± monetary policy includes all measures taken by the government, the Central Bank and the Treasury to affect the amount, availability, and use of money and credit. Narrow point of view ± monetary policy consists of regulations regulating the supply of money by discretionary action on the part of the Central Bank in particular.

y

The stance of monetary policy at any point of time reflects its reaction to the prevailing overall economic situation. Expansionary ± designed to help stimulate economic recovery or to avoid the dangers of an economic downturn. Restrictive ± intended to dampen inflationary tendencies by functioning in a restrictive manner to deny fuel to the members of a potentially serious situation. There are also occasions when the posture of monetary policy can be sai to be neither expansionary or restrictive

Objectives of Monetary Policy
Monetary Stability ± in the operation of monetary policy, the Bangko Sentral ng Pilipinas gives primary and immediate importance to the maintenance of monetary stability. It is necessary because confidence in money is the basis for all economic activities in a society based upon credit. high rate of economic growth