Definition
The term central bank refers to the institution responsible for managing the currency of a country, establishing interest rates, and controlling its money supply. The goals of a country's central bank include stabilizing prices, fostering economic growth, and increasing employment.
Explanation
Also referred to as a country's monetary authority and reserve bank, a central bank is a government agency responsible for managing interest rates, controlling the money supply, and maintaining its currency. Central banks may also regulate the country's financial system, establishing standards such as the banking system's reserve requirement, thereby reducing risk and increasing consumer confidence.
The activities central banks engage in can include:
Regulating the country's financial system.
Controlling the country's money supply.
Establishing and maintaining monetary policy.
Establishing and maintaining interest rates.
Acting as a lender of last resort.
Printing or minting currency.
The naming convention of central banks is not standardized throughout the world; examples include: Bangko Sentral ng Pilipinas, Bank of Canada, Bank of England, Bank of Mexico, Cayman Islands Monetary Authority, Central Bank of Brazil, Central Bank of Ireland, European Central Bank, Gosbank, Maldives Monetary Authority, Monetary Authority of Singapore, National Bank of Ukraine, Reserve Bank of Australia, Reserve Bank of India, Reserve Bank of New Zealand, South African Reserve Bank, and the U.S. Federal Reserve System.
.jpg)
.jpg)
