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KIHY DID MAJOR BANKS SKATCHED INTO INCONVENTIONAL U MONETARY Poucy AFTER 2008 wuat WAS THE IMPACT OF THESE POLSCES ON THEIR L
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Answer to 1. In 2008 due the massive impact of financial crisis banks switched into the unconventional monetary policy after 2008 because the entire market and banking system gets collapsed and depositors lost faith in banks Due to which the standard arbitarage relationship starting breaking down such as covered interest arbitarage.There was money to be had without risk.The real economy gets devastated.Central started taking measures to flow liquidity of money in the market by granting various relief to banks such reducing liquity rato etc. and thus reducing interest rate so that flow of money to the economy can be increased but that is not the real Interest rate.The Central control the interest rate through its policy and tried to control inflation in the economy.

Answer to 2. It impact the economy by changing the demand and supply of money in the economy by changing the consumer expenditure and Investment which directly impact the inflation in the economy thus this policy helps in controlling the inflation in the local economy.

Answer to 3. Due to such changes in the policy it brings the spillover effects of the macroeconomic shocks on financial market and this impact the exchange rate,trade and policies of emerging markets economy.

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