Monetar y Policy and Financial Regulation 19 undertake in 2010/11 are an attempt to restore the confidence of bondholders in order to convince them to continue to hold the bonds. Nevertheless, bondholders have been demanding higher rates of return in exchange for agreeing to hold the debt of some governments. This raises the payments governments must make to service the debt. In the context of an economic downturn, when government revenues are already under pressure, higher debt serving payments squeeze other areas of spending. There is a danger that obligations to creditors overwhelm the obligation to protect and progressively realize human rights. International cooperation may be necessary to support progressive realization of human rights. VI. Monetary Policy and Financial Regulation Monetary policy and financial sector regulations influence the resources available and provide potentially powerful instruments for directing financial resources toward uses that support the realization of human rights. Monetary policy, conducted by central banks, directly affects the resources available for the realization of economic and social rights, especially the right to work. It does this by influencing interest rates, exchange rates and the amount of credit available in the economy. Higher interest rates discourage borrowing and make credit more expensive—as a consequence, economic activity slows when central banks raise interest rates, and there is less job creation. Indeed very high interest rates make lead to unemployment, as firms can no longer afford the working capital necessary to keep employing and producing. Exchange rates affect the competitiveness of the economy and the level of exports and imports. For example, if the domestic currency is devalued relative to other currencies (i.e., it takes more of the domestic currency to purchase one dollar, one Euro, etc.), exports become less expensive (and more competitive) while imports become more expensive. In many, but not all cases, this encourages exports and limit imports, outcomes which promote the growth of the domestic economy. Central banks also often have a regulatory role to play with regard to the financial sector, raising questions about their obligation to protect rights from the actions of third parties, e.g., private financial institutions. In contrast to the past when central banks were more employment-centered, monetary policy today almost universally prioritizes price stability (sometimes through a policy of ‘inflation-targeting’) over maintaining stable growth and aiming for full employment. When central banks attempt to maintain price stability, they affect interest rates and exchange rates with important consequences for the realization of certain rights. For example, interest rates affect access to and affordability of housing. Exchange rates can have a sizeable impact on the prices of food, fuel, and other critical imports, and on employment outcomes through trade effects. Likewise, central banks can have, and have had in previous decades,