Structural Changes in the Banking System and the Determination of the Stock of Money
The structure of the banking system is in the midst of profound change. Some aspects of this have already been largely completed, for example the banks’ switch to liability management; some are still in progress, for example the continuing shift to variable rate lending, away from fixed rate lending — though this shift reflected worsening inflation, and could cease, or even reverse, were inflation conquered; others are still in the pipeline — their outline may already be discernible, but they have not yet fully taken effect; these last include prospective changes in the structure of retail deposit business and the form of payments technologies. In this chapter I shall consider these changes and explore their implications for monetary control, notably for the achievement of target rates of growth for certain specified monetary aggregates.
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