The labour government had initially understood the need to control the money supply and factors that contribute to inflation. On March 2014, the bank has approved monetarism inspired policy approach admitting that it lost the control to money supply (Bank of England, 2016). The control is now forwarded to expenditure and investment decisions. This form of control tightened the economic circulation.
The need for an economic policy emerged when monetarism inspired the authorities. The central bank then realized that several failed economic ideas have attributed to the failure of government.
The monetarist content was observed in three major areas – overall performance of economy, development of employment rate and management of inflation. Monetarism helped the country to overcome wage suppression. It was identified that wage suppression has let people to engage in excessive borrowing and high degrees of debts that became unmanageable after certain point of time. The initial approach taken to apply monetarism did not yield benefits due to insufficient expertise and experience in the field.
The Bank of England realized its lack of competency and then looked back to its failed economic policies to apply monetarism wherever possible. With a combination of innovative economics and monetarism, the country survives today and manages all its tax policies and social responses towards development. Most importantly, the competency of human resources has proliferated after the right mix of economic theories. Monetarism inspired policy approach was meant to regulate the economy in terms of money flow.