Abstract

The monetary authority represented by the central bank is the only authority capable of controlling the money supply within the limits that achieve monetary stability through its use of its direct and indirect tools. It is reflected in the form of an imbalance in the monetary balance and exposes the economy to monetary shocks stemming from a change in monetary policy, whether they are expected shocks aimed at addressing inflation or unemployment, or unexpected results resulting from wrong policies. , The monetary shocks may be expansionary when the increase in the physical cash balances that individuals possess exceeds what is expected, or the monetary shocks are contractionary, as this shock occurs as a result of the central bank unexpectedly selling large and unexpected quantities of government bonds in the open market, and the effect varies. Monetary shock according to the strength of the economy and the extent of its absorption shock The relationship between central banks and political authorities has witnessed a fluctuation between blatant intervention and almost absolute freedom during the past two centuries. But the succession of economic crises after the First World War required governments to intervene in the activities of central banks, and then soon central banks regained a measure of their independence again after the stability of economic conditions, but what followed the Second World War in promoting the Keynesian view favoring state intervention received some thing From the independence of central banks, and then soon the shift to market forces led to calls for making central banks independent of the government apparatus, as it is the only authority capable of controlling the money supply within the limits that achieve monetary stability through its use of direct and indirect tools.