Central Bank

newratings.com  Jun 16  Comment 
VIENNA (dpa-AFX) - The European markets ended Thursday's session in the red, after breaking a five session losing streak on Wednesday. The continued pull back in crude oil prices and concerns over a potential "Brexit" weighed on sentiment...
Wall Street Journal  Jun 16  Comment 
Bank Indonesia unexpectedly cut interest rates to help spur economic growth, taking advantage of a stable rupiah, benign inflation and the Federal Reserve’s decision to stand pat on policy.
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Financial Times  Jun 16  Comment 
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MarketWatch  Jun 15  Comment 
DoubleLine’s Jeff Gundlach is losing faith in central bankers. That’s not to say the bond guru, who has maintained a fairly bearish outlook for markets, had much faith in them to start.
Financial Times  Jun 15  Comment 
In a big week for policy meetings, price action in Tokyo provides a guide
The Hindu Business Line  Jun 15  Comment 
Japanese stocks rose in choppy trade on Wednesday, snapping a four-day losing streak thanks to short-covering, while coming central bank meetings and worries that Britain might vote to leave the Euro...
Yahoo  Jun 14  Comment 
Jeffrey Gundlach, the chief executive officer at DoubleLine Capital, said on Tuesday that investors are dropping risky assets and turning to safer securities including Treasuries and gold because they are losing faith in central banks. "Central...
Euromoney  Jun 14  Comment 
The rouble has enjoyed a strong start to the year, shrugging off underlying weakness in the Russian economy, leading the CBR to hike rates by 50 basis points on Friday.
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Central banks have emerged over the past four centuries when mankind moved from a system of gold or silver backed currencies to private issuers to fiat money. The first central bank in the world was the Swedish Riksbank, founded in 1668.

Scottish businessman William Paterson founded the Bank of England in 1694 on request of the British government to finance a war.

The First Bank of the USA was founded in 1791 and had a 20-year charter. It was however revived again in 1816 and gave birth to the Second Bank of the United States. This desperate move to stabilize the currency by US president James Madison was later revoked by US president Andrew Jackson who withdrew the bank's Federal Charter in 1836. In 1841 the Second Bank of the United States ceased all operations.

The history of central banking came alive again in 1913 with the constitutionally disputed foundation of the Federal Reserve.

As nearly all currencies in the world have transformed into fiat money over the past 4 centuries, i.e. the notes mandated to be used by government fiat, all countries have some sort of central bank that is responsible for keeping inflation low and provide a money supply that does not overshoot economic growth too much. Other tasks vary widely from country to country.

Political pressure has often led to inflation as rulers want to finance their activities with the in the first place seemingly cheap money.Image:Example.jpg

Central Banking

Central banks primarily purchase short-term debt issued by the governments of the countries in which they serve. Sometimes they've been used as a political piggy bank with the central banks buying riskier investments causing huge losses and inflation if the bank's government doesn't bail them out since the bank has no assets to sell to counter inflation, leaving to many banknotes in circulation.


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