Monetary policy assists to solve the problems associated with banking crises in many ways. Here are the following:-
1. Provide liquidity in banking sector: the liquidity in the banks means that banking system refers to cash on demand which is the liquidity that banks require to meet the working of business and financial requirements. Markets in banking normally supply the funds necessary to sustain the circulation of credit.

2. Decreasing interest rate: lowering interest rates on credit helps banks reduce their costs and continue investing to boost the economy.

3. Lending to solvent banks: Central banks are often lending the money to solvent banks to prevent bankruptcies. So that local people don’t have to face problems.

4. Asset-liability management (ALM) means balancing assets and liabilities. Banks balance their assets (loans) and liabilities (deposits) to ensure that they have enough liquid assets to meet short-term obligations while increasing earnings.

5. Funding sources: Nowadays, banks are trying to diversify their funding sources, such as supporting many pvt. or govt. schemes, helping the consumer to safe investment in stocks, bonds. Banks provide consumer options like debt fund, equity fund or hybrid fund etc. because of this banks maintains trust of consumers.

Banks used to compare metric (LDR) Loan-to-Deposit Ratio (LDR) to assess the bank’s loans and total depositing and investing. These measures can help to manage the financial health of banks.