A central bank is the public institution that is responsible for regulating money supply and the interest rates of the country in which it is located, and it holds the monopoly for printing the national currency.
The majority of central banks are independent from political interference and so can operate under their own leadership. Interest rates are their primary function, and this control is calculated upon the given economic situation. They can also have supervisory powers over other banks and financial institutions and in cases of financial crisis, like those of recent times, are able to act as a last resort lender. Examples of these banks are the Bank of England and the Federal Reserve System of the United States.
The activities and responsibilities of a central bank include dictating the interest rate of the nation; implementing monetary policy; having total control of the nation’s money supply in its entirety; it is the Government’s bank and the bankers’ bank; it will manage the country’s foreign exchange, its gold reserves and is the Government’s stock register; it in many cases regulates and supervises the banking industry.
Setting the official rate of interest means that the central bank is responsible for managing inflation and therefore credit control. Their decision is made upon careful consideration of a variety of policy mechanisms to ensure that the rate is as beneficial as it possibly can be for the country.
The very first central bank is the central bank of Sweden, the Sveriges Riksbank, or, as it is more simply known, Riksbanken. This was founded in Stockholm in 1664, and is the oldest central bank that is still operating today. This was followed in 1694 by the Bank of England, created at the request of the English government so that it could help to pay for war.
The majority of central banks are independent from political interference and so can operate under their own leadership. Interest rates are their primary function, and this control is calculated upon the given economic situation. They can also have supervisory powers over other banks and financial institutions and in cases of financial crisis, like those of recent times, are able to act as a last resort lender. Examples of these banks are the Bank of England and the Federal Reserve System of the United States.
The activities and responsibilities of a central bank include dictating the interest rate of the nation; implementing monetary policy; having total control of the nation’s money supply in its entirety; it is the Government’s bank and the bankers’ bank; it will manage the country’s foreign exchange, its gold reserves and is the Government’s stock register; it in many cases regulates and supervises the banking industry.
Setting the official rate of interest means that the central bank is responsible for managing inflation and therefore credit control. Their decision is made upon careful consideration of a variety of policy mechanisms to ensure that the rate is as beneficial as it possibly can be for the country.
The very first central bank is the central bank of Sweden, the Sveriges Riksbank, or, as it is more simply known, Riksbanken. This was founded in Stockholm in 1664, and is the oldest central bank that is still operating today. This was followed in 1694 by the Bank of England, created at the request of the English government so that it could help to pay for war.
