Central Bank

RECENT NEWS
Insurance Journal  5 hrs ago  Comment 
China’s central bank will take on a bigger role in macro-prudential management and in averting systemic risk in the financial system, President Xi Jinping said at a once-in-five-years government work conference that ended on Saturday. Financial...
Wall Street Journal  11 hrs ago  Comment 
Central bank news will be front and center this week, with the Bank of Japan and European Central Bank holding their respective monetary policy meetings.
The Times of India  Jul 16  Comment 
Czech central bank should have tools to tame property market, sa:Czech central bank should have tools to tame property market, says vice governor
Reuters  Jul 16  Comment 
China's central bank will take on a bigger role in macro-prudential management and in averting systemic risk in the financial system, President Xi Jinping said at a once-in-five-years government work conference that ended on Saturday.
The Economic Times  Jul 16  Comment 
Wipro, RIL, Bajaj Auto, Kotak Bank and RBL Bank will announce April-June results on Thursday.
The Economic Times  Jul 15  Comment 
Among all major economies, the interest rate regime in India only is on a downward trajectory.
Wall Street Journal  Jul 14  Comment 
The risk to markets is that investors get too comfortable with the idea that by moving gradually central banks won’t create much disturbance.
The Times of India  Jul 13  Comment 
HUNGARY-RATES/POLL (POLL):POLL-Hungarian central bank seen holding rates as inflation remains low
Financial Times  Jul 12  Comment 
Rate rise boosts the Canadian currency as central bank positions for inflation uptick




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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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