Central Banks

What is the Central Bank?

The central bank (also sometimes referred to as the reserve bank or monetary authority) is the entity responsible for the monetary policy of a country or of a group of member states. Its primary responsibility is to maintain the stability of the national currency and money supply, but more active duties include controlling subsidized-loan interest rates, and acting as a "bailout" lender of last resort to the banking sector during times of financial crisis. Most wealthy countries today have an "independent" central bank-that is, one which operates under rules designed to prevent political interference.

• Implementation of monetary policy
• Controls the nation's money supply
• Acts as the government's banker as well as the bankers' bank ("lender of last resort")
• Manages the country's forex and gold reserves, as well as the government's stock register
• Sets the official interest rate, used to manage both inflation and the country's exchange rate