TUGAS TUTORIAL 1

MATA KULIAH BAHASA INGGRIS NIAGA 156

NAMA: Muti Aladia

NIM : 043992055

Please choose one of the topics below. Then, write an essay consisting of 3 paragraph.
Elaborate your own opinion with the references related to the topic that you choose.

The primary goal of central banks is to provide their countries’ currencies with price stability
by controlling inflation. What will happen if a country does not have Central bank?
Do you agree that a floating exchange rate adds uncertainty to international trade? Explain
your reason!

Answer

The central bank is the entity that is responsible for overseeing the monetary system of a
country. This is inseparable from the function of the central bank in the economy itself. The
central bank as the state bank also generally issues currency, regulates the credit system,
supervises commercial banks, manages foreign exchange reserves and acts as a lender of
last resort. That is, the central bank works as a lender to the bank in circumstances that
force it to maintain bank liquidity. This, the central bank has a purpose and is given the
responsibility to achieve and maintain stability in the value of a dead currency. Currency
stability is a fundamental obligation for the central bank to maintain state and public
confidence.

In practice, the stability of the currency value in question includes the stability of the value
of money against goods and services as well as stability against the currencies of other
countries. Currency stability, both in terms of inflation and exchange rates, is very important
to support sustainable economic development and improve people's welfare. The central
bank is very important for a country, there are several things that happen if Indonesia does
not have a central bank, namely:
 • It is difficult to achieve price stability of goods and services Uncontrollable inflation
rate
• The setting and implementation of chaotic monetary policy
• Unstable foreign currency exchange rates in Indonesia
• The risk of carrying out banking-related activities is increasing because there is no
supervision.

The central bank plays an important role for a country because it is an institution that has
the responsibility to oversee the monetary system in a country. The Central Bank keeps the
inflation rate under control and is always at the lowest possible value or at the optimal
position for the economy (low/zero inflation), by controlling the balance of the amount of
money and goods.
A floating exchanged rate system, a system in which the domestic currency exchange rate is
floated against a foreign currency, or in accordance with market movements where the
occurrence of currency rates is based on the supply and demand of foreign currencies.
I agree that if the exchange rate of the rupiah increases, the uncertainty of international
trade increases. The instability of the rupiah can affect trade between countries because the
strengthening or weakening of the rupiah will affect the value of foreign exchange in
international trade. The influence of the strength of the rupiah on trade A strengthening
rupiah will reduce the value of foreign exchange. Therefore, export demand for Indonesia
will decrease because export commodities in Indonesia become more expensive so that it
will reduce export activities, when the rupiah weakens it will increase the value of foreign
exchange. Therefore, export demand for Indonesia will increase because export
commodities in Indonesia become cheaper. However, Indonesia will not carry out too many
export activities in this phase because the profits will also decrease