Central Bank
- (Stanford University - Jaclyn Chen)
- Overview
A central bank is a financial institution that controls the production and distribution of money and credit in a country or group of countries. The central bank is responsible for:
- Set monetary policy
- Supervise member banks
- Manage currency
- Control the money supply
- Implement specific goals of monetary stability, low inflation and full employment
A central bank is different from a commercial bank, which is where you can save your money. Central banks have a monopoly on increasing the monetary base. They implement monetary policy by adjusting the money supply, usually by buying and selling securities on the open market. These open market operations affect short-term interest rates, which in turn affect long-term interest rates and economic activity.
Some examples of central banks include:
- US Federal Reserve
- European Central Bank
- bank of england
- Bank of Japan
- Swiss national bank
- Bank of canada
- Reserve Bank of Australia and New Zealand
[More to come ...]
