Central bank

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MarketWatch  12 hrs ago  Comment 
The Australian dollar tumbled to a four-year low as a central banker emphasized the benefits of a weaker aussie for the Australian economy.
Clusterstock  Nov 25  Comment 
BEIJING (Reuters) - China's central bank will wait until the fourth quarter economic index is released before considering further rate cuts and easing, a central bank adviser said on Tuesday, adding a decision would depend on U.S. and Japanese...
Yahoo  Nov 24  Comment 
U.S. stocks rose on Monday on hopes that China will take further accommodative monetary policy action if needed, while merger deals kept traders focused even as volumes were below average. Energy shares ...
Yahoo  Nov 24  Comment 
World stocks ground higher on Monday after a frenetic round of activity at central banks in Asia and Europe showed they are willing to do more to support economic growth and inflation. European shares, ...
The Economic Times  Nov 24  Comment 
Some central banks are raising rates, some lowering theirs but overall the fact is that the Fed is no longer going to do its quantitative easing.
Wall Street Journal  Nov 23  Comment 
The head of the Swiss National Bank reiterated concerns that a popular vote on requiring the central bank to keep a fifth of its assets in gold would hinder its ability to conduct monetary policy.
Wall Street Journal  Nov 22  Comment 
The People’s Bank of China and European Central Bank moved to pump up flagging global growth, boosting stock markets but raising questions about the limitations of central-bank intervention.




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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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