Central Bank

RECENT NEWS
Forbes  5 hrs ago  Comment 
In its 2016 annual report, the Russian Central Bank revealed a major attack on its accounts. Hackers infiltrated the Bank's systems and had their sights set on a $45 million payday.
Reuters  Dec 2  Comment 
Hackers stole more than 2 billion roubles ($31 million) from correspondent accounts at the Russian central bank, the bank said on Friday, the latest example of an escalation of cyber attacks on financial institutions around the globe.
Euromoney  Dec 2  Comment 
IMF responds with $12 billion loan approval; banks’ long-term prospects improve.
guardian.co.uk  Dec 1  Comment 
Respected official, 58, leaves amid fears over effects of Trump presidency Replacement unclear but finance minister says transition will be orderly Mexico’s central bank governor, Agustín Carstens, will stand down in July, leaving his post...
MarketWatch  Nov 30  Comment 
The U.S. central bank must take a wait-and-see stance to the economic policy ideas of President-elect Donald Trump
The Economic Times  Nov 30  Comment 
​Asian central banks can be divided in two camps when it comes to a strong dollar, with the larger group clearly in favor of weaker currencies to support exports.​
Reuters  Nov 18  Comment 
Dallas Fed Bank President Robert Kaplan on Friday reiterated that he thinks it is nearly time for the U.S. central bank to raise interest rates.




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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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