Central Banks
Central Banks
In its simplest context, Central Banks are responsible for overseeing the monetary system for a nation (or group of nations); however, central banks have a range of responsibilities, from overseeing monetary policy to implementing specific goals such as currency stability, low inflation and full employment.
Central banks also generally issue currency, function as the bank of the government, regulate the credit system, oversee commercial banks, manage exchange reserves and act as a lender of last resort.
There are eight major central banks today:
- US Federal Reserve Bank (US)
- European Central Bank (EUR)
- Bank of England (GBP)
- Bank of Japan (JPY)
- Swiss National Bank (CHF)
- Bank of Canada (CAD)
- Reserve Bank of Australia (AUD)
- Reserve Bank of New Zealand (NZD)
Central Banks and Interest Rates
The balancing act of stable employment and prices is a tricky one, and the main mechanism a central bank has to regulate these levels is interest rates. Interest rates are a primary influencer of investment flows.