Central bank

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Wall Street Journal  12 hrs ago  Comment 
A range of forces—including political blowback, whiffs of inflation, stirrings of fiscal stimulus and worries that the policies themselves may backfire—are pressing central-bank chiefs to push short-term interest rates no lower.
The Hindu Business Line  Jan 13  Comment 
Former Reserve Bank Governor YV Reddy pens his memories
MarketWatch  Jan 13  Comment 
Was it a “fat finger” trade? Or faulty algos? Or maybe even harsh Brexit comments from French President François Hollande? The BIS says a whole host of factors led to the pound’s mysterious flash crash in October.
Euromoney  Jan 12  Comment 
A challenging inflation outlook, sluggish economic activity and the steep slide in the value of the lira look set to force the Turkish central bank to oppose the wishes of its President and hike interest rates.
Reuters  Jan 11  Comment 
China's central bank launched spot checks on leading bitcoin exchanges in Beijing and Shanghai, ratcheting up pressure on potential capital outflows and knocking the price of the cryptocurrency down more than 12 percent against the dollar.
MarketWatch  Jan 10  Comment 
Turkish lira remains under pressure after central bank intervention
MarketWatch  Jan 10  Comment 
The Central Bank of the Republic of Turkey on Tuesday announced moves to tackle "unhealthy price formations" in the market that it says are "inconsistent with economic fundamentals. The moves come amid unrelenting pressure on the Turkish lira....
Yahoo  Jan 5  Comment 
Mexico's central bank sold dollars in Mexico and New York on Thursday to fight off the peso's nose dive to record lows amid fears U.S. President-elect Donald Trump's protectionist policies could further hammer Latin America's second biggest...




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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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