What does monetary policy do?

It charters new banks.

It alters the supply of money.

It mints new coins and prints bills.

It changes the way that taxes are collected.

1 answer

Monetary policy primarily alters the supply of money. It involves the management of money supply and interest rates by a country's central bank (such as the Federal Reserve in the United States) to achieve macroeconomic objectives such as controlling inflation, managing employment levels, and stabilizing the currency.

While monetary policy can impact the availability of money (which in turn influences banks and lending), it does not typically involve chartering new banks, minting new coins, or directly changing the way taxes are collected.