Central Bank

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Wall Street Journal  5 hrs ago  Comment 
For a while, it looked like QE’s star had faded a little. Negative rates had become the latest central-banking fad. But the Bank of England’s decisions last week mark a break with that trend and a new strand in the policy divergence debate.
The Economic Times  Aug 5  Comment 
Basu said, "In general it is extremely important that central bank has autonomy. It aims to institutionalise decision making on interest and inflation."
MarketWatch  Aug 5  Comment 
Australia’s central bank has signaled further interest rate cuts are likely, and forecast Friday that below-target inflation might persist until the end of 2018.
newratings.com  Aug 4  Comment 
PRAG (dpa-AFX) - The Czech central bank held its key interest rate steady on Thursday, and reaffirmed its currency ceiling. The Czech National Bank Board held the two-week repo rate at 0.05 percent, in line with economists' expectations....
Yahoo  Aug 4  Comment 
The Bank of England has cut its key interest rate for the first time since the global financial crisis, to a new record low of 0.25 percent.
Financial Times  Aug 4  Comment 
Quantitative easing has prevented deflation and the policy is now ordinary
Financial Times  Aug 3  Comment 
If central banks pass baton to governments to stimulate growth then the bond rally is over
The Economic Times  Aug 2  Comment 
MSCI's broadest index of Asia-Pacific shares outside Japan was down 0.4 per cent, after the S&P 500 ended Monday 0.1 per cent lower, despite hitting an intraday record high.
Reuters  Aug 1  Comment 
Asian shares slipped on Tuesday, taking their cues from a modestly lower day on Wall Street, while crude oil prices stabilised after their overnight tumble and the U.S. dollar edged higher.




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History

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.

References

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