Central bank

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newratings.com  4 hrs ago  Comment 
CANBERA (dpa-AFX) - Most Asian stocks fell on Thursday as a mixed lead from Wall Street and the oil price downturn kept investors nervous, heading into key central bank meetings. The Bank of England and the U.S.Federal Reserve are expected to...
Reuters  9 hrs ago  Comment 
Growth in international trade is lagging global income for the first time in decades, spelling more uncertainty for the world economy, Singapore's central bank chief Ravi Menon said on Thursday.
newratings.com  Sep 14  Comment 
WASHINGTON (dpa-AFX) - The dollar is trading slightly lower in comparison to all of its major rivals Wednesday afternoon. However, the buck is little changed overall with traders remaining in a cautious mood. Investors remain hesitant to make...
Reuters  Sep 14  Comment 
Central bank efforts to soften the blow to markets from weakening fundamentals are losing their impact and are leaving a system vulnerable to shocks, analysts at Citi said.
newratings.com  Sep 14  Comment 
CANBERA (dpa-AFX) - Asian stocks fell broadly on Wednesday after their U.S. peers tumbled overnight in the wake of a sharp decline in oil prices and rising bond yields on doubts over central banks' willingness or ability to boost...
MarketWatch  Sep 13  Comment 
Investors are facing greater risks than ever before in history due to aggressive central bankers who are resorting to unconventional methods to keep interest rates low, said Paul Singer of Elliott Management.
MarketWatch  Sep 13  Comment 
Ray Dalio, founder of investment firm Bridgewater Associates, said Tuesday that central-bank easing is pushing investors into ever more riskier assets but disagreed with a call for the Federal Reserve to start raising rates. "We are in a situation...
Benzinga  Sep 13  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...




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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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