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Monetary discipline

From HandWiki - Reading time: 2 min

Monetary discipline is a phrase used by some economists when speaking of monetary policy, generally meaning limiting the money supply of an economy in some way.[1][2][3]

Definitions

One definition of monetary discipline is a central bank matching the money supply to the level of production or reserves in an economy.[4] This definition holds that money printing should have a relationship to a particular economic equation, rather than being influenced by politics.[4]

Another definition is constraining the money supply, limiting inflation, and growing an economy by increasing the velocity of money.[5]

Another way of achieving monetary discipline is by keeping a pegged exchange rate, thereby matching a money supply to a foreign currency.[6]

References




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