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The banking system creates money by buying assets from the public, paying for the assets through the issuance of additional monetary liabilities (e.g., checking deposits).
If Argentina would have employed an orthodox currency board, those reserves would have always been 100percentt of the system's monetary liabilities.
Some tweaks are in order (a derivatives push-out; removal of per-account coverage caps on guaranteed monetary liabilities; treatment of risk-based fees as seigniorage) but not a major overhaul.
Last year, for example, the "pure" foreign reserves in the convertibility system fluctuated wildly from a high in February of 193percentt of its monetary liabilities to a low in December of 82percentt.
After all, a balance sheet reveals a central bank's monetary liabilities (high-powered base money).
It works on automatic pilot: The board's rate is credible because monetary liabilities (lire in circulation) must be covered 100% by foreign-reserve assets.
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Unlike U.K. companies, U.S. corporations can eliminate directors' monetary liability for duty of care breaches.
This message was reinforced with the specter of significant monetary liability.
Holger Spamann, Monetary Liability for Breach of the Duty of Care? 8 J. Legal Analysis 337 (2016).
This article clarifies why optimal corporate governance generally excludes monetary liability for breach of directors' and managers' fiduciary duty of care.
The Merger Agreement also strictly limits Aladdin's exposure to monetary liability in the event it commits a breach of the contract.
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Justyna Jupowicz-Kozak
CEO of Professional Science Editing for Scientists @ prosciediting.com