Financial Economics and Financial Literacy

The purpose of a central bank is to supply operational capital to the country’s banking sector. The primary purpose of a central bank is to promote the stability of a country’s financial system achieve price stability (low and stable inflation) and help manage economic fluctuations.Central banks communicate to the public through economic policy and inflation rate targeting has emerged as the leading framework for monetary policy.  The central bank can lend to the banking sector thereby ensuring that the banking system has sufficient liquidity for companies and individuals to borrow money because the availability of credit has a direct impact on business and consumer spending. It is also the role of the central bank to ensure that there is sufficient liquidity in the economy so that depositors can withdraw their savings. Zimbabwe is currently experiencing difficulties to obtain foreign currency to meet international payments obligations. The difficulties to ...

Tweet to @ExpBusinessSA Zimbabwean politicians and regulators have settled for unfocused and poorly designed steps to create a better financial system.  It should be noted that policy makers who repeatedly fail to protect the public are not accountable. The introduction of bond notes is a result of willful blindness on the part of politicians and regulators in Zimbabwe. The very people who should be protecting the public from financial crises are the ones perpetrating measures that create the very chaos regulators should be predicting and preventing. The banking crises of 2003-2004 where a lot of banks were closed and some went under curator-ship was repeated again in 2012-2013. It seems the regulators and the policy makers did not learn anything from the first banking crisis. When Gideon Gono assumed office as governor of the central bank in December 2003 inflation was 622,8% in January 2004, the financial crisis which followed until 2008 was all man-made. Whilst it was ...