Benefits of Policies

Benefits of Policies

Policies are essential tools for organizations to effectively manage their operations and achieve their goals. They provide clear guidelines and procedures for employees, stakeholders, and other relevant parties to follow.

I) Savings and investments in dollars; this is for the simple reason that the rise in interest rates will increase the remuneration of deposits in that currency against others.

Its effect is not immediate, but gradual, and will attract more capital to the United States, especially if that practice continues, since investors will make their money more profitable in that territory than, for example, in Latin America or another continent, which it would turn around the last trend, in which capital flows flowed out of that country, mainly towards emerging economies in search of higher returns. Consequently, the positive result is favorable for those who maintain savings and investments in greenbacks.

Benefits of Policies

II) Imports from the United States and exports from other countries, since the investment will grow, given that the retribution in that currency will be higher compared to the others. A strong dollar benefits US importers, who can buy the same products from other countries by paying less.

On the other side of the transaction, there are exporters who will have made their products more attractive and competitive to be purchased in the United States. This will favor companies that sell or have businesses there since they will see their income increase when they translate that currency into their reference currency.

III) The banking sector, because will increase the interest margin (the difference between what they pay for their deposits and what they charge for the loans they grant) from the banks that operate in dollars.

IV) I brake to the bubbles because any expansive policy has the risk of generating financial bubbles (progressive and exaggerated increases in the price of an asset or a good, well above its equilibrium value). Now that the FED is normalizing this policy with more expensive credit and with a halt to monetary expansion, this should help to avoid feeding that type of crisis.