ISSN (Print) - 0012-9976 | ISSN (Online) - 2349-8846

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WEST BENGAL- Municipal Elections

policy pursued by the authorities. First, the liquidity and the potential liquidity in the markets are so enormous that no monetary measures, however stringent they may be, can touch anywhere beyond the fringe of the financial markets. The innovation and 'sophistication' of the market mechanism and the multiplicity of the credit instruments have gone to such an extent that any institution, with a name and ability to drum up a favourable credit report in the market (which is not difficult), can transform its entire credit requirements into an actual credit instrument through, what is called, the technique of 'liability management". This technique of raising credit and undertaking financial intermediation Is not confined to banks and financial institutions. It is now be- ins employed effectively and more generally by all institutions. The more central bankers are determined to control credit, the greater the diversion of financial intermediation from financial to non-financial intermediaries and from the controllable regions to non-controllable regions. What is .significant from the point of view of the inflation psychology now is not the actual stock of money but the actual and the potential process and facility for the creation of money and near-money.

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