Central bank

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The Economic Times  Aug 30  Comment 
Buy Central Bank of India at a price target of Rs 114.0 and a stop loss at Rs 105.0 from entry point
Wall Street Journal  Aug 30  Comment 
The Bank of Japan’s asset purchases have helped shares in real-estate investment trusts, but home builder stocks may be telling the true story.
Benzinga  Aug 29  Comment 
Prattle is a text analysis company that uses proprietary algorithms to provide weekly research on central bank communications. This is a reprinted version of their Macrocast, originally published on their blog. Prattle's models are based on...
Yahoo  Aug 26  Comment 
“How slow are things on Wall Street this week?” Well funny you should ask. Many expected that to change today with Fed Chair Janet Yellen speaking at the Kansas City Conference at the Tetons in Jackson Hole. The 10-year Treasury Note has...
Reuters  Aug 26  Comment 
Schooled in economic thinking that confines monetary policy to the short run, central bankers gathering in Jackson Hole, Wyoming, are grappling with a singular change: whether they can take over as guardians of long-term growth with programs that...
The Economic Times  Aug 26  Comment 
“There is still no appetite for sales, but outside of Russia and China few purchasers either," Matthew Turner and his team wrote in a note this week.
Yahoo  Aug 25  Comment 
WASHINGTON (AP) — The world's key central banks have worked themselves into contortions to try to rev up economic growth, raise inflation and coax consumers and businesses to borrow and spend more.




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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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