The Defiance (band) presentation - (Shobnam/Aidan/Raagavi/Daniel)
Daniel & Ernesto's presentation
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Transcript of Daniel & Ernesto's presentation
The question•Do you know what does the Bank of Mexico do and why is it relevant for your wellbeing?
•If not, your are in right place to learn it!
Money and the Economy
Cocoa beans
Axe money(Copper)Bullion
Roman gold coin
Chinese shell money
• Later, commodity money supported expansion of trade and division of labour
Money and the Economy
•Fiat money has no intrinsic value, yet it's the footing of any modern economy
•But it has an archfiend:Inflation
Do you know what am I talking about?
Inflation
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¿How is it measured?By the Consumer Price Index
¿What is inflation?Continuous rise in the general price level
Inflation• Why does inflation matter?
– It inflicts huge social costs:
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Exacerbates Inequality
Distorts price signals
Generates uncertainty(interest rates)
The Bank of Mexico• It´ s the Central Bank of Mexico
• It has several ends:1) To provide the Mexican economy
with domestic currency
2) To promote the sound development of the financial system
3) To foster the smooth operation of the payment systems
But its primary objective isTo ensure the stability of the purchasing power of the Mexican currency
Autonomy
• In 1993, the Congress passed a constitutional amendment providing Bank of Mexico with autonomyi. No authority can command the central bank to
dispense financingii. Independent judgmentiii. Independent management
Monetary Policy
•“Though [paper money] has no intrinsic value, yet, by limiting its quantity, its value in exchange is as great as an equal denomination of coin, or of bullion in that coin.”
David Ricardo (1772-1823)
Bristish Economist