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Why heads of central banks are so powerful

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.

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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 ...

Solution Summary

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

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