In the early 20th century, many countries began to abandon the gold standard in favor of fiat currency, which is not backed by a tangible asset but is instead backed by the government that issues it. This shift allowed countries more flexibility in managing their monetary policy, but it also meant that the value of their currency was subject to change based on economic conditions.
Central banks were created in many countries to help manage the value of fiat currency. These institutions are responsible for implementing monetary policy, setting interest rates and controlling the money supply. One of the main tools used by central banks to manage inflation is setting short-term interest rates. Higher interest rates can help to reduce inflation by making borrowing more expensive, while lower interest rates can stimulate economic growth by encouraging borrowing and spending.
Tons of great Information and would like to thank you for your contribution to this network – Johnny! May others make good informed decisions on how to manage their goals in the new world economy 2024!