Central bank

RECENT NEWS
The Economic Times  10 hrs ago  Comment 
At 0710 GMT, the rouble was around 0.8 per cent weaker against the dollar at 60.22 and had lost 1 per cent to 65.93 versus the euro.
The Economic Times  11 hrs ago  Comment 
China's yuan was flat on Friday after the central bank set an official guidance rate that barely changed from the previous session.
Financial Times  Jul 30  Comment 
Government plans to entrench RBI direction of monetary policy
The Economic Times  Jul 30  Comment 
The Russian rouble fell back on Thursday after a strong bounce the previous day, with a more cautious mood taking hold before a central bank meeting.
Daily FX  Jul 29  Comment 
The second quarter GDP season is already underway, and the data has yet to generate serious volatility – the US figures may change that – but it has reinforced trends.
The Economic Times  Jul 29  Comment 
The Russian rouble strengthened on Wednesday after the central bank said it had halted its forex buying to replenish the country's reserves.
The Economic Times  Jul 27  Comment 
China's yuan was flat against the dollar on Monday after the central bank set the official guidance rate almost unchanged.
The Economic Times  Jul 24  Comment 
Interestingly, governors of all these banks do not have a veto power, but not a majority of them are appointed by the government too.
The Hindu Business Line  Jul 24  Comment 
Inflation target, too, in most countries is decided by both the govt and the central bank
Reuters  Jul 24  Comment 
The International Monetary Fund said on Friday it has recognised the central bank governor named by Libya's official government as its sole contact and ended ties with a rival bank chief in Tripoli.




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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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