Central bank

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MarketWatch  Feb 24  Comment 
Fed Chief Janet Yellen is scheduled to speak one day before the Fed goes silent ahead of its March 14-15 meeting. If Yellen talks up a rate hike, the market could price it in.
Reuters  Feb 23  Comment 
China's monetary policy this year will contain risks posed by debt, prevent asset bubbles and keep economic growth on track, the central bank's chief economist said on Thursday.
Financial Times  Feb 22  Comment 
Second successive 75 basis point reduction made as recession seems to be bottoming
MarketWatch  Feb 21  Comment 
Like the old saying goes: ‘When America sneezes, the world catches a cold.’
Wall Street Journal  Feb 21  Comment 
Brazil’s central bank is widely expected to continue with its aggressive interest rate reductions later this week as inflation continues to slow rapidly and the economy shows few signs of recovering.
Financial Times  Feb 19  Comment 
Monetary policy involves trade-offs that are fundamentally political in nature
The Economic Times  Feb 17  Comment 
Under governor Urjit Patel, the RBI has significantly reduced communication with markets after he took over in September, an analysis of his public comments shows.
Reuters  Feb 16  Comment 
Denny Jose, a small-town caterer in Kerala, was closely watching the RBI meeting last week.
Wall Street Journal  Feb 14  Comment 
Headline inflation may not be the best guide to where central banks will be headed




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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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