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DEPARTMENT 17

Central Banking and Monetary Policy

How central banks set policy, policy instruments, and transmission mechanisms.
Entry Level: L1RBI Grade BUPSC GS IIIBanking

Syllabus Modules & Canonical Topics

5 Modules comprising 24 Canonical Topics.

17.1

The Central Bank

4 Canonical Topics
17.1.1
Functions of a central bank
L1
17.1.2
Banker to the government and to banks
L1
17.1.3
Independence and accountability
L2
17.1.4
The central bank balance sheet
L3
17.2

Policy Instruments

4 Canonical Topics
17.2.1
Quantitative tools: policy rate, CRR, SLR and open market operations
L1
17.2.2
Qualitative tools and moral suasion
L1
17.2.3
The interest-rate corridor and standing facilities
L3
17.2.4
Sterilisation
L3
17.3

Monetary Transmission

6 Canonical Topics
17.3.1
The interest-rate channel
L2
17.3.2
The credit channel
L3
17.3.3
The exchange-rate channel
L3
17.3.4
The asset-price channel
L3
17.3.5
The expectations channel
L3
17.3.6
Lags and incomplete pass-through
L3
17.4

Policy Frameworks

4 Canonical Topics
17.4.1
Inflation targeting
L2
17.4.2
Monetary targeting
L3
17.4.3
The Taylor rule
L3
17.4.4
Nominal GDP targeting
L4
17.5

Unconventional and Macroprudential Policy

5 Canonical Topics
17.5.1
Quantitative easing
L3
17.5.2
Forward guidance
L3
17.5.3
Macroprudential policy
L3
17.5.4
The zero lower bound and negative rates
L4
17.5.5
Yield curve control
L4
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