Central bank

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Reuters  6 hrs ago  Comment 
REUTERS - Barely a month into 2015 and the direction of monetary policy around the world is crystal clear -- no fewer than 17 central banks have eased policy to some extent to counter the deflationary pressures from the collapse in global oil prices.
Financial Times  6 hrs ago  Comment 
Wall Street Journal  Feb 4  Comment 
A surprise cut in the reserve requirement for Chinese banks by the People’s Bank of China comes at a time of heightened capital outflows.
The Straits Times  Feb 3  Comment 
February 04, 2015 1:58 AM THE Central Bank of Myanmar (CBM) and the Monetary Authority of Singapore (MAS) have entered into a memorandum of understanding (MOU) to strengthen bilateral cooperation.
The Straits Times  Feb 3  Comment 
February 04, 2015 1:52 AM CENTRAL banks around the world, particularly those in Asia, are cutting interest rates in a bid to spur growth, with Australia the latest to move.
Wall Street Journal  Feb 2  Comment 
Turkey’s central bank is still considering an extraordinary meeting to cut interest rates despite a lira selloff that sent the currency to a record low against the dollar last week, Governor Erdem Basci said.
Wall Street Journal  Jan 30  Comment 
Switzerland’s central bank will double its 2014 payments to federal and regional governments to $2.17 billion, but indicated its decision to abandon a cap on the Swiss franc could jeopardize payments this year.
Wall Street Journal  Jan 30  Comment 
Turkey’s central bank verbally intervened to stem the lira’s slide as the currency hit record lows against the dollar, seeking to ease fears that policy makers may prematurely cut interest rates despite a broad emerging-markets selloff.
New York Times  Jan 30  Comment 
Russian Central Bank Governor Elvira Nabiullina defended the bank's decision to cut rates on Friday, saying that the monetary loosening would stop an excessive slowdown in the economy.




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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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