Central Bank

A central bank, reserve bank, or monetary authority is a public institution that manages a state's currency, money supply, and interest rates. Central banks also usually oversee the commercial banking system of their respective countries. In contrast to a commercial bank, a central bank possesses a monopoly on increasing the nation's monetary base, and usually also prints the national currency, which usually serves as the nation's legal tender. Examples include the European Central Bank (ECB), the Federal Reserve of the United States, and the People's Bank of China.

The primary function of a central bank is to manage the nation's money supply (monetary policy), through active duties such as managing interest rates, setting the reserve requirement, and acting as a lender of last resort to the banking sector during times of bank insolvency or financial crisis. Central banks usually also have supervisory powers, intended to prevent bank runs and to reduce the risk that commercial banks and other financial institutions engage in reckless or fraudulent behavior. Central banks in most developed nations are institutionally designed to be independent from political interference.

Read more about Central Bank:  History, Activities and Responsibilities, Goals of Monetary Policy, Policy Instruments, Banking Supervision and Other Activities, Independence

Famous quotes containing the words central and/or bank:

    The central paradox of motherhood is that while our children become the absolute center of our lives, they must also push us back out in the world.... But motherhood that can narrow our lives can also broaden them. It can make us focus intensely on the moment and invest heavily in the future.
    Ellen Goodman (20th century)

    A man’s labour is not only his capital but his life. When it passes it returns never more. To utilise it, to prevent its wasteful squandering, to enable the poor man to bank it up for use hereafter, this surely is one of the most urgent tasks before civilisation.
    William Booth (1829–1912)