Purchase Solution

Why heads of central banks are so powerful

Not what you're looking for?

Ask Custom Question

In a 2009 Newsweek article, The 50 Most Powerful People List, there are 3 bankers who are listed as the 4th, 5th, and 6th most powerful people in the world.

Read the following article on the "Economic Triumvirate": Downloadable pdf version: The Global Elite: Economic Triumvirate, or go to http://www.newsweek.com/id/176288
â?¢Explain why these three men (the 3 bankers who are listed as the 4th, 5th, and 6th most powerful people in the world) might be considered more powerful than most countries' leaders.
â?¢Explain how or why, during the recession of 2008â?"09, banks of the world seemed to unite on cue to lower interest rates worldwide.
â?¢Provide discussion on how you would improve U.S. monetary policy.

Purchase this Solution
Solution Summary

This solution discusses why the heads of central banks can be more powerful than national leaders.

Solution Preview

I) Explain why these three men might be considered more powerful than most countries' leaders.

The three men mentioned in the article are the heads/chairmen of three of the most developed and powerful central banks in the world. As such, they have substantial control over their individual nations' monetary policies, which have very broad effects in a highly financially integrated world, such as we have today. For instance, Ben Bernanke of the Federal Reserve in the United States has authority over the money supply, interest rates, and dollar exchange rate. However, because the United States is the largest economy and global commodities are priced in U.S. dollars, monetary policy in the U.S. that affects interest and exchange rates can greatly impact other world economies. An example would be oil prices. Oil traded in global commodity markets is prices in U.S. dollars. If the dollar appreciates (becomes more expensive relative to other currencies), then the price of oil should fall as other countries will now need more of their ...

Purchase this Solution
Free BrainMass Quizzes
Economic Issues and Concepts

This quiz provides a review of the basic microeconomic concepts. Students can test their understanding of major economic issues.

Elementary Microeconomics

This quiz reviews the basic concept of supply and demand analysis.

Pricing Strategies

Discussion about various pricing techniques of profit-seeking firms.

Economics, Basic Concepts, Demand-Supply-Equilibrium

The quiz tests the basic concepts of demand, supply, and equilibrium in a free market.

Basics of Economics

Quiz will help you to review some basics of microeconomics and macroeconomics which are often not understood.

View More Free Quizzes
Related BrainMass Solutions

  • Japanese banks owning stock

    553878 Japanese banks owning stock Banks in Japan are allowed to own stock while U.S. banks are not. Is this a good idea? Why or why not? Defend your answer.

  • Important information about Central Limit Theorem

    203351 Central Limit Theorem Proof What evidence do we have that the Central Limit Theorem is true? Why do so many of life's events share the same characteristics with Central Limit Theorem?

  • The Federal Reserve

    What makes the Fed unique among central banks? Federal Reserve Describe the history of the Federal Reserve System (the Fed), and not central banking in general. What makes the Fed unique among central banks?

  • Central Banks and Exchange Rates Regulation

    * Describe when and why central banks buy either their own currency or the currency of another nation in an effort to control exchange rates. * What did the central banks do to stabilize the financial systems in 2007â?"2009?

  • Stabilizing financial systems

    Provide a briefing that addresses the following: Describe when and why central banks buy either their own currency or the currency of another nation in an effort to control exchange rates.

  • CAMELS rating system

    The reason why CAMELS is fast becoming a global standard adopted by central banks is that there are several countries in which the central banks apprehend the banking sector may face financial difficulties.

  • credit quality

    that the money base is then increased by Central bank so as to target the Fed funds rate etc.)

  • deferred acquisition costs, high debt ratios, credit risk

    The liabilities of banks are related to M0 because banks are obliged o keep minimum reserves with the central bank. The liabilities of banks are related to M1 because banks are liable to pay demand deposits and checkable deposits.

  • Indicators

    Why is the average prime rate charged by banks an appropriate lagging indicator? a. Why are manufacturers' new orders, nondefense capital goods, an appropriate leading indicator?

View More Related Solutions