Central Bank

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FX Street  Apr 21  Comment 
We expect a 25pb cut in the next monetary policy meeting as additional s timulus is considered... For more information, read our latest forex news and reports.
guardian.co.uk  Apr 20  Comment 
When delivering the 30th Mais lecture at the Cass Business School (Report, 19 March), the governor of the Bank of England, Mark Carney, admitted that the "primacy of price stability as well as the institutional framework necessary to deliver it",...
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The plan was discussed at a recent meeting between the central bank and senior banking executives in Beijing. Further details were not given.
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BRUSSELS (dpa-AFX) - Serbia's central bank left interest rates unchanged for a fourth consecutive month in April, citing low inflation pressures and stable inflation expectations. The Executive Board of the National Bank of Serbia...
New York Times  Apr 17  Comment 
Critics claim the central bank has lost its independence under Gyorgy Matolcsy, whose policies have included aggressive rate cuts.
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“Everybody has a plan until they get punched in the face.� – Mike Tyson For the last 25 days I’ve been traveling in Argentina and South Africa, two countries whose economies can only be described as fragile, though for...




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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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