Central Banks are charged with regulating the size of a nation’s money supply, the availability and cost of credit, and the foreign-exchange value of its currency. Regulation of the availability and cost of credit may be designed to influence the distribution of credit among competing uses. The principal objectives of a modern central bank in carrying out these functions are to maintain monetary and credit conditions conducive to a high level of employment and production, a reasonably stable level of domestic prices, and an adequate level of international reserves.
Function of a Central Bank
A central bank usually carries out the following responsibilities:
- Implementation of monetary policy.
- Controls the nation's entire money supply.
- The Government's banker and the bankers' bank ("Lender of Last Resort").
- Manages the country's foreign exchange and gold reserves and the Government's stock register;
- Regulation and supervision of the banking industry
- Setting the official interest rates- used to manage both inflation and the country's exchange rate - and ensuring that this rate takes effect via a variety of policy mechanisms
For more information about the functions of various Central Banks click on the links below:
Watch a Video - How Central Bank controls money supply
|< Prev||Next >|