Central Bank

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MarketWatch  11 hrs ago  Comment 
The ruble strengthens Wednesday after Russia’s central bank announces measures to shore up the country’s banks.
Clusterstock  Dec 17  Comment 
Russia's central bank has spent over $10 billion since the start of the month in  a failed attempt to halt the ruble's slide . Between Dec. 12-15 alone, the Bank of Russia spent over $4.3 billion of the country's foreign currency...
Financial Times  Dec 17  Comment 
Surging demand for new homes could be undermined by unjustified bubble worries, says think-tank
Reuters  Dec 16  Comment 
Asian central banks have ramped up their intervention in currency markets to stem the sell-off roiling emerging markets, testing the notion that the region is better placed to handle a market rout than during its 1997-1998 financial crisis.
Wall Street Journal  Dec 16  Comment 
Sweden’s central bank held its main interest rate steady at zero Tuesday but pushed back the timing of expected rate hikes to the second half of 2016 from mid-2016 as it seeks to nudge inflation closer to target.
New York Times  Dec 16  Comment 
Western sanctions and the collapse in the price of oil have weighed on the economy and hurt the ruble.




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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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