Central Banks all around the world are known by various names like reserve banks, state banks, monetary authority etc. Its the Central bank alone, which is not merely a regulatory authority but also retain the right to provide the government with the currency in form of loans.
The Central Banks of the countries work just as the other commercial banks in theory such as they charge interest on the advances they make to other banks or government or any other borrowing party on different rates. However, still there are some characteristics which set the Central banks apart from other regular banks like, general public can't be involved in money transaction with these banks as they are enjoying dominance because of creating currency for the country, which they give to the government in form of loans. Several other commercial banks also get currency from Central banks in form of bonds and securities.
Usually the commercial banks knock the doors of a central bank in case of severe monetary troubles or crisis. The primary function of the Central Bank in any of the country is ensuring the money supply; it makes the monetary policies prevailing in the country. Other main duties comprise of calculating and steadying the rate of interest on sponsored loans and making sure all the commercial banks follow its rules and regulations. Furthermore, a central bank also keeps a surveillance over all the other banks and financial institutions to ensure ruling out all the possibilities of spurious activities. Usually the more developed and established countries have autonomous bodies of Central bank. Independent Central Banks are those which are said to be free of political interferences and influences and which prevent political interferences via designing different rules and regulations.
Two of the best and illustrious examples of such autonomous Central banks are the European Central Bank and the Federal Reserve System in US. Many of the countries also hold Central Banks responsible for handling their country's overseas exchange and gold treasury along with country's stock list other than managing and overseeing banking business of the country. Moreover, the rate of inflation in any country is managed by these Central banks; the policies and strategies designed by them have a remarkable effect on the inflation rate of a country.
Majority of these Central banks around the globe are publicly owned, however the remaining are private property with the exception of the Central bank in the US. The central bank of United States of America known as Federal Reserve is owned by combination of both the private and public factions.
The Central Banks of the countries work just as the other commercial banks in theory such as they charge interest on the advances they make to other banks or government or any other borrowing party on different rates. However, still there are some characteristics which set the Central banks apart from other regular banks like, general public can't be involved in money transaction with these banks as they are enjoying dominance because of creating currency for the country, which they give to the government in form of loans. Several other commercial banks also get currency from Central banks in form of bonds and securities.
Usually the commercial banks knock the doors of a central bank in case of severe monetary troubles or crisis. The primary function of the Central Bank in any of the country is ensuring the money supply; it makes the monetary policies prevailing in the country. Other main duties comprise of calculating and steadying the rate of interest on sponsored loans and making sure all the commercial banks follow its rules and regulations. Furthermore, a central bank also keeps a surveillance over all the other banks and financial institutions to ensure ruling out all the possibilities of spurious activities. Usually the more developed and established countries have autonomous bodies of Central bank. Independent Central Banks are those which are said to be free of political interferences and influences and which prevent political interferences via designing different rules and regulations.
Two of the best and illustrious examples of such autonomous Central banks are the European Central Bank and the Federal Reserve System in US. Many of the countries also hold Central Banks responsible for handling their country's overseas exchange and gold treasury along with country's stock list other than managing and overseeing banking business of the country. Moreover, the rate of inflation in any country is managed by these Central banks; the policies and strategies designed by them have a remarkable effect on the inflation rate of a country.
Majority of these Central banks around the globe are publicly owned, however the remaining are private property with the exception of the Central bank in the US. The central bank of United States of America known as Federal Reserve is owned by combination of both the private and public factions.
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