Central bank

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NEW YORK: Wall Street stocks finished little changed on Monday (Aug 21) amid investor caution ahead of this week's Jackson Hole summit of central bankers. Friday's Jackson Hole meeting featuring speeches by Federal Reserve Chair Janet Yellen....
Clusterstock  9 hrs ago  Comment 
LONDON – A former senior official at the UK Treasury says global central banks' policy of quantitative easing in the wake of the 2008 financial crisis is like heroin for the economy. Nicholas Macpherson, who was permanent secretary to the...
Financial Times  Aug 21  Comment 
It is time for central banks to let governments take on more of the burden of economic policy
Channel News Asia  Aug 18  Comment 
The Ukrainian central bank said on Friday it had warned state-owned and private lenders of the appearance of new malware as security services said Ukraine faced cyber attacks like those that knocked out global systems in June.
Financial Times  Aug 17  Comment 
Wall Street slides while euro takes a hit from ECB minutes
Reuters  Aug 17  Comment 
Global stocks fell on Thursday as investors trimmed their exposure to riskier assets after central bank minutes revealed a wary take on the economic outlook from ratesetters on both sides of the Atlantic.
Financial Times  Aug 15  Comment 
Scale of challenge becomes clear as policymakers face unwinding assets after decade of stimulus
Clusterstock  Aug 14  Comment 
LONDON – Kenneth Rogoff, a professor at Harvard University and one of the world's most prominent economists, said central banks across the globe must start preparing themselves to introduce negative interest rates during the next global...
The Economic Times  Aug 12  Comment 
The former deputy governor held monetary policy settings steady in his first rate decision.




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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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