Central Bank

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Banking Business Review  6 hrs ago  Comment 
The Central Bank of the UAE has expanded its collateral range by broadening access to its Sharia-compliant short-term lending facility, making it easier for Islamic banks to borrow overnight.
The Economic Times  Mar 24  Comment 
As a result of conversion, 15,38,68,113 equity shares were alloted to the government of India against the PNCPS, Central Bank of India said.
The Australian  Mar 22  Comment 
CENTRAL banks are cutting rates and buying bonds because they don’t know what else to do to stimulate demand and growth.
Reuters  Mar 22  Comment 
Reserve Bank of India (RBI) governor, Raghuram Rajan, on Sunday cautiously backed a government plan to hand public debt management to a new agency, as the two sides played down reports of friction over the biggest regulatory shakeup in a generation.
The Economist  Mar 19  Comment 
THE protests in Frankfurt yesterday outside the offices of the European Central Bank may have had a "rent-a-mob" component, resembling previous violent affairs targeting G8 and World Trade Organisation meetings. But they may be part of a broader...
Reuters  Mar 19  Comment 
Sweden's central bank surprised markets on Wednesday by cutting interest rates further below zero and increasing its bond-buying stimulus program, reflecting its determination to prevent the crown's recent rise from snuffing out a pick-up in...
Wall Street Journal  Mar 19  Comment 
The SNB maintained a deposit rate of minus 0.75%, saying that negative interest rates are the most effective way of preventing the Swiss franc from rising in value.
Financial Times  Mar 15  Comment 
The late author’s fantasy finds life in US economy, writes James Mackintosh
New York Times  Mar 13  Comment 
Russia's central bank cut its key interest rate on Friday by one percentage point to 14 percent in an attempt to support the economy, which is sliding into a brutal recession.




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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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