Central bank

RECENT NEWS
New York Times  12 hrs ago  Comment 
Word of the loans comes after the Chinese economy slowed somewhat over the summer, although it is still expanding faster than most countries worldwide.
Mondo Visione  Sep 16  Comment 
The International Monetary Fund (IMF)’s East African Regional Technical Assistance Center (East AFRITAC) held a workshop on the Committee for Payment and Market Infrastructures (CPMI) and IOSCO Principles for Financial Market Infrastructures...
Reuters  Sep 16  Comment 
Persisting political tensions should help send crude oil prices back above $100 per barrel in coming quarters and they should then stay there through 2017, Russia's central bank said on Tuesday.
Financial Times  Sep 16  Comment 
Given the fragility of the global recovery it is remarkable how faith in the power of central bankers has dispelled concern about geopolitical upsets
New York Times  Sep 15  Comment 
The move by the newly elected Parliament set off a struggle for control of the country’s wealth and vast oil reserves.
Wall Street Journal  Sep 14  Comment 
With the European Central Bank dramatically easing its monetary policy while markets await signals from the Federal Reserve for an eventual rate increase, the rest of the world's central banks are all but paralyzed.
Reuters  Sep 14  Comment 
Libya's elected parliament on Sunday dismissed the central bank governor of the oil producing country, a parliamentary spokesman said.
Reuters  Sep 14  Comment 
Financial asset prices are at "elevated" levels and market volatility remains "exceptionally subdued" thanks to ultra-loose monetary policies being implemented by central banks around the world, the Bank for International Settlements said on Sunday.




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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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