Central Bank

RECENT NEWS
Japan Today  Jun 13  Comment 
U.S. and Japanese central bank meetings will be among the key trading cues for Tokyo investors this week, as they looks for hints of future policy moves on both sides of the Pacific. The Federal Reserve's comments will be pored over for clues...
Reuters  Jun 13  Comment 
The central bank governor of Bangladesh was elected chairman of the Asian Clearing Union (ACU) on Saturday, a group of nine central banks who signed up to a joint payment system that processed $20 billion worth of transactions in 2014.
Wall Street Journal  Jun 12  Comment 
Foreign central banks have increased their holdings of U.S. government debt to nearly a record high even as other investors have fled Treasurys amid a rout.
The Economic Times  Jun 11  Comment 
At 0800 GMT, the rouble was 0.6 per cent weaker against the dollar at 54.66 and lost 0.1 per cent to trade at 61.54 versus the euro.
Reuters  Jun 10  Comment 
Economists at China's central bank have sharply lowered their inflation forecast for 2015, while predicting a pick up the world's second-biggest economy during the next six months thanks to more stable home prices and firmer foreign demand.
The Economic Times  Jun 9  Comment 
At 0708 GMT, the rouble was 0.4 per cent stronger against the dollar at 55.76 and had gained 0.4 per cent to 62.98 versus the euro.
The Economic Times  Jun 8  Comment 
At 0915 GMT the rouble was 0.1 per cent weaker against the dollar at 56.30 and 0.1 per cent weaker at 62.65 versus the euro.
Financial Times  Jun 8  Comment 
Starting point of ridiculously low yields has fuelled volatility




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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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