1  Charles L. Schultze (1989), “Of Wolves, Termites, and Pussycats: Or, Why We Should Worry about the Budget Deficit”, Brookings Review, vol. 7 (Summer), pp. 26–33. BIS Review 90/2010  3  What About the Conduct of Monetary Policy? The challenges for monetary policy are not dissimilar from those confronting the fiscal authorities.
In the more sophisticated economies, such as we have in South Africa, money is created by banking institutions through their lending and investment operations. The control over the money supply therefore becomes more difficult, and the central bank can only indirectly influence money creation with instruments such as interest rate variations, overall liquidity management, open market operations, and money market interventions.