Monetary polcy is a policy implemented by a federal government agency or a central bank as a way of controlling interest rates in order to administrate the distribution of currency in circulation of a country, state or region. Monetary policies main tool to maintaining equilibrium in the circulation of money is determined by interest rates. Interest rates in turn determine the true value of exchangable legal tender for currencies.Central banks are the main source of printed currency which is borrowed to others at a rate of interest by banks and financial institutions that hold accounts with a
particular monetary authority. Banks and financial institutions in turn borrow this proceeds of interest bearing currency
to companies and households who are considered approprate for such crediting. In periods of economic and financial distress
central banks normally lower interest rates to encourage borrowing and in efforts to stimulate an economic crisis. However I consider this problems inevitable, simply because economic theorists regard such as periods of business cycles. Monetary policy making is not part of governmental operations, they are solely operating as an independent authority because they also borrow money to the government (which are fiscal policy makers).
Fiscal policy is a policy directed by the government to encourage stable financial and economic dynamics. An example of how the
government can do such, is by utilizing tools disposable such as grants and implementing new tax regimes that will affect the
distributon of currency in a country, state or region. Both monetary and fiscal policy are important and significant in affecting the distribution of money, nonetheless, monetary policy making affects the overall distribution of currency. Primarily because monetary policy makers borrow to fiscal policy makers. Governments are at the mercy of central banking
authorities.
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