Colombia's Monetary System

Colombia's Monetary System

The monetary system in Colombia is responsible for for all the money in the country. The Colombian monetary system was constructed under the laws of the Colombian constitution. The Banco de la Republica is in control of the monetary system used in Colombia. According to Encyclopedia of the Nations, "The Central Bank conducts monetary policy based on the behavior of the financial sector." This means that the Central Bank or Banco de la Republica's main responsibilities are: issuing money, and controlling the amount of money and value of the money that is in circulation; with these information they make policies to improve the system. They are the center of our entire economy, which makes it one of the most important systems in the whole country. Colombia used to go by the gold standard, but in 1993 there was a shift of power and everything changed. 

One of the monetary system's most important factor is inflation. Inflation can be defined as the rate at which the general level of prices for goods and services is rising, and subsequently, purchasing power is failing. This means that inflation is the notion of creating new money when the purchasing power is failing, so that the economy is balanced out. The only problem with this is that the new printed money takes value from the already existing money. This causes money to have less and less value. Colombia also applies the concept of inflation, but the amount of inflation is more regulated in Colombia than in the U.S.

Works Cited

Unknown, unknown. "Encyclopedia of the Nations." Colombia Money, Information about Money in Colombia. N.p., n.d. Web. . <http://www.nationsencyclopedia.com/economies/Americas/Colombia-MONEY.html>.