Central banking system and its functions

Contents
Definition
Main functions
Currency issuance
Naming of central banks
Main policy instruments
Conclusion

Central bank
Monetary authority of a country granted the
exclusive privilege to lend a government its
currency.

Main functions
controlling money supply
money issuance
setting the official interest rate
implementing monetary policy

Currency issuance
Exclusive privilege of a central bank

Examples of naming
Bank of country
National bank of
Reserve bank of

Main policy instruments
Open market operations
Reserve require ratio
Discount rate policy

Open market operations
Do not require the immediate printing of new currency
Most frequently used tool of central bank

Required reserve ratio

Discount rate policy
Affect the balance between demand and supply
Taken into account before starting business

Conclusion
Central bank system becomes the most important mean of economy policy in crisis period