The oligopolistic competition in the British banking sector has witnessed the success of moral suasion as a monetary policy instrument, which allows the central bank to control by persuasion and directive. Since five major banks need to be persuaded in England, a moral suasion policy instrument is very effective because noncompliers can be immediately identified and held up for censure, but in the United States there are many commercial banks and so the Federal Reserve must use legal controls to pursue the same ends.
