monetary system adopted by india
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Indian Monetary System. Monetary policy is the process by which monetary authority of a country i.e. RBI controls the supply of money in the economy by its control over interest rates in order to maintain price stability and achieve high economic growth.
Before opening up of our economy prior to 1990 we had our currency pegged to a basket of currencies may be around those of 5 countries. Then later we sent it into free float with limited intervention, which means the currency value is dictated by supply/demand gap and currency stabilization include intervention in the market by the central bank and so on.
Initially, the proportional reserve system was adopted in India. Later on, India adopted the minimum reserve system and is still continuing with this system of note issue. The entire issue of currency notes is subjected to the regulations framed in the RBI Act, 1935.
Before opening up of our economy prior to 1990 we had our currency pegged to a basket of currencies may be around those of 5 countries. Then later we sent it into free float with limited intervention, which means the currency value is dictated by supply/demand gap and currency stabilization include intervention in the market by the central bank and so on.
Initially, the proportional reserve system was adopted in India. Later on, India adopted the minimum reserve system and is still continuing with this system of note issue. The entire issue of currency notes is subjected to the regulations framed in the RBI Act, 1935.
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