Increasing international economic integration requires countries to determine appropriate monetary policy. This means control of the money supply or interest rate by the monetary authority (Lipsey and Crystal, 2007). Its main objective is to ensure economic stability and growth. The mechanism that enables these changes in monetary policy is called the monetary transmission mechanism (MTM). Therefore, the purpose of this essay is to discuss and analyze the role of MTM in solving macroeconomic problems. First, this essay will determine how MTM functions within the economy. Second, it will discuss an example of monetary policy involvement in practice. To begin, the government implements monetary policy by assigning an official interest rate or money supply (Anderton 2006). Additionally, he cannot control both simultaneously. This is because the demand for money cannot be controlled. First, changes in the money supply lead to changes in the purchasing power of money. Changes in the purchasing power of money imply changes in the level of real interest rates (Anderton 2006). Since the lending power of lenders is affected by changes in the money supply. Therefore, they increase or decrease the level of interest rates to induce saving or borrowing. The willingness of individuals and businesses to save or spend depends on the value of the wealth they hold (Anderton 2006). Therefore, this implies changes in investment and consumer spending rates. Therefore, this in turn leads to changes in the level of aggregate demand. The main actor that supports the government in implementing its monetary policies is the central bank (Anderton 2006). The central bank can pursue monetary policy in two directions...... middle of document ......May 18, 2011).Krugman, P. and R. Wells. 2009. Economy. 2nd edition New York: Worth Publishers. Martin, C. and Milas C. 2001. Monetary Policy Modeling: Inflation Targeting in Practice. Uxbridge: BU. Brunel University. http://people.bath.ac.uk/ (assessed 20 May 2011). Mahajan, S. 2005. The British Economy - Analysis at a Glance, 1992-2003. London: ONS. Office for National Statistics. http://www.statistics.gov.uk/ (assessed 18 May 2011). Lipsey, G. and KA Chrystal. 2007. Economy. 11th ed. New York: Oxford University Press. Sloman, J. and A. Wride. 2009. Economy. 7th ed. New Jersey: Pearson Prentice Hall. Monetary Policy Committee. nd The monetary policy transmission mechanism. London: BE. Bank of England. http://www.bankofengland.co.uk/ (accessed May 17, 2011). Vittal, N. (2011). Monetary Policy Conference. Nazarbayev University UPC.