Monetary Policy and Central Banks Functions

The central bank's function includes maintaining a safe and efficient payment system?

Central banks have the privilege of creating what is called Monetary Base?

Banks can turn to the central bank for the money they need to clear payments, at a fixed price, also known as Lender of last Resort?

The central bank intervenes in the market by providing its own base money to banks?

The Monetary Base is created by the official banks and consists of reserves + currency?

Credit institutions extend credits to households and companies without necessarily balancing their operations, resulting in some banks experiencing shortages?

In repos, the central bank lends money to commercial banks and receives financial assets as a collateral.

The central bank can influence the banks' lending behavior by setting a reserve requirement on the deposits received from the public.

The price of liquidity is determined by the refinancing rate, with higher rates leading to lower demand for liquidity.

The central bank influences the demand for its liquidity service by setting a price for it.

The resulting money-market rate influences all short-term interest rates in the economy.

The two overnight standing facilities provided by the central bank are a marginal lending facility and a marginal deposit facility.

Banks can obtain short-term liquidity weekly through the central bank's main refinancing operations.

Banks having excess liquidity can deposit it at the central bank at the marginal deposit facility rate.

The central bank's role in times of stress involves monitoring banks' extension of credit to each other.

Potential lenders may be uncertain of the ability of borrowers to repay their debts during stress times, leading to banks' unwillingness to lend to each other.