The system by which an economy is provided with money. It is possible for a small country simply to use some other country's money, but most countries choose to provide their own. This is partly for reasons of national prestige, partly because governments derive seigniorage from providing money, and partly because of a belief that economic stability can be promoted by using monetary policy to adapt to localized shocks, or to insulate the economy from the effects of foreign shocks. An independent monetary system must include a mint to provide coinage and a central bank to provide base money. It usually includes a system of commercial banks to provide deposit, loan, and payments facilities. It then needs a regulatory body to supervise the banks, to minimize the chance of bank failure, and a lender of last resort, to prevent failure of any one bank turning into a system-wide crash. These supervisory and last-resort functions may be combined in a single central bank, as in the UK, or dealt with by separate bodies, as in Germany and the US.

• commitment
• commodity
• commodity agreement
• Commodity Credit Corporation
• commodity exchange
• commodity market
• commodity price index
• Common Agricultural Policy
• common external tariff
• common market
• commons
• common stock
• Community Charge
• community indifference curve
• Companies, Registrar of
• company
• company director
• company law
• company taxation
• comparative advantage
• comparative costs
• comparative statics
• comparisons, interpersonal
• compensated demand curve
• compensating variation