The main implication for monetary policy of financial deregulation is that it generates structural change in the financial sector and therefore an interest rate target is more appropriate than a money stock target.

Question

Quizplus · Accepted Answer

Financial deregulation can lead to changes in the demand for money, making it difficult to control the money supply. An interest rate target can be more effective in such a dynamic environment.

The Main Implication for Monetary Policy of Financial Deregulation Is