After a long cycle of price stability inflation seems to return around the world. Central bank stimuli to create inflation and rising oil prices are helping. We analyze all the causes and effects that inflation will have on the economy.
To know exactly what methods of exchange control are? First we should try to understand that what exchange control is? Exchange control refers to the policy of the government through which it controls or intervenes in the foreign exchange market. In other simple words, government puts restrictions on the sale and purchase of foreign currencies and refers a measure which influences the foreign exchange rate and closing free movements of foreign exchange in the country.
There are four reliable methods of advancing loan by banks. As we know that “banks borrow to lend”. After keeping a portion of the total deposits, as cash reserve, the balance amount is either invested or advanced to needy persons and businessmen to earn profit. Hence for this purpose, bank advances his balance cash by using different methods. These methods are known methods of advancing loans from bank.
Letters of credit are issued by the bank to his customers specially the businessman to provide facilities in the business transaction in different places. There can be personal letters of credit and commercial letters of credit. Commercial letter of credit is used in foreign trade when one exporter wants to get the value of his exported goods before the delivery of importers, and the importers in such a situation get help from bank in the shape of issuing “Letter of Credit”, to receive the delivery of the good.
The principles of note issue are classified into two classes. One opinion says that complete conversion of notes into gold bars is known as the “Currency Principle”. The second advocates the elasticity in the supply of money according to the needs of trade and commerce, known as “Banking Principle”. These two theories are discussed below in detail:-