C) Describe the principal instruments of credit policy

Credit Policy

Credit policy is... component of economic policy. It is a combination of measures taken by... Central Bank to affect the supply of credit. The aims of... credit policy may include stimulation or restriction of investment or consumer spending,... avoidance of price inflation.

Credit policy and monetary policy tend to be closely related and in some countries credit policy is regarded as... part of monetary policy.

Credit policy largely works indirectly. The Central Bank controls... amount of credit advanced by commercial banks through the interest rate policy, by influencing... liquidity, expanding or contracting the volume of Central Bank money. The principal instruments available for this purpose are... discount policy, minimum reserve requirements and open market operations. Direct credit control involving... establishment of credit ceilings is less frequently used now than in... past, many governments regarding it as... undesirable interference with the market mechanism.

Words you may need:

price inflation ценовая инфляция

the amount of credit advanced... размеры кредита, предоставленного...

discount policy учетная политика

credit ceiling потолок кредитования

Ex. 9. a) Supply the prepositions where necessary.