Money creation and central banking:

Central banks occupy a pivotal position in the institutional fabric of an economy.  The functions of a modern central bank are vastly different from what was expected from the early central banks founded in Europe in the seventeenth century.  In this Unit we'll talk about the process of credit creation and the role of central bank in the process. Then we go on to the instruments of monetary policy at the disposal of the central bank to influence  the monetary policy. We will also briefly discuss the main functions and structure of central  bank in India. More generally, we will examine the monetary policy in the India and around major economies of the world. We will also look at role the central bank plays in market for foreign exchange and how it influences the foreign exchange reserves in an economy.