problem 1: The financial system is complex in structure and function all through the world. There are many different kinds of institutions: banks, insurance companies, mutual funds, stock and bond markets, and so on-all of which are regulated by the Government. The financial system channels billions of Rupees per year from savers to people with productive investment opportunities. If we take a close look at financial structure all over the world, we find out eight fundamental puzzles that require to be solved in order to understand how the financial system works.

Required:

Describe in details the eight fundamental puzzles which require to be solved in order to understand how the financial system works.

problem 2: Why is pegging the nominal interest rate problematic for the Central Bank?