Business Environment, 1st Edition by Pearson

| 154 | Part II: Economic Systems and Policies

Relating to Business

(iv) Problems brought by liberalization: Post-liberalization, it has

become diffi cult to put in place an effective monetary policy

because of (a) ever-increasing foreign direct investment in the

aftermath of economic liberalization and globalization; (b)

greater freedom enjoyed by commercial banks in a growing

economy; (c) entry of foreign banks with rapid technological

innovations in products and processes such as use of credit cards,

ATMs, etc. all of which have caused increased money supply;

and (d) more liberal credit policy and increasing consumerism

have been diverting ...