Central bank

central bankreserve bank, or monetary authority is an institution that manages the currency and monetary policy of a  or formal monetary union, and oversees their commercial banking . In contrast to a commercial bank, a central bank possesses a monopoly on increasing the monetary base. Most central also have supervisory and regulatory powers to ensure the stability of member institutions, to prevent bank runs, and to discourage reckless or fraudulent behavior by member .

Central in most developed nations are institutionally independent from political interference. Still, limited control by the executive and legislative bodies exists.

Activities of central banks

The Eccles Federal Reserve Board  in , D.C. houses the main offices of the Board of Governors of the ’ Federal Reserve

Functions of a central bank usually include:

  • Monetary policy: by setting the official interest rate and controlling the  supply;
  • Financial stability: acting as a ’s banker and as the bankers’ bank (“lender of last resort”);
  • Reserve management: managing a ’s foreign-exchange and  reserves and  bonds;
  • Banking supervision: regulating and supervising the banking ;
  • Payments : managing or supervising means of payments and inter-banking clearing systems;
  • Coins and notes issuance;
  • Other functions of central may include economic research, statistical collection, supervision of deposit guarantee schemes, advice to in financial policy.