A central bank (or reserve bank) manages a state's currency, money supply, and interest rates. It may have custody of the country's sovereign wealth fund.
Central banks usually oversee the commercial banks of their country. It issues the national currency, the nation's money. It controls the overall supply of money. In contrast to a commercial bank, a central bank can increase or decrease the amount of money in the nation.
The oldest central bank is the Bank of England. The largest banks are now the European Central Bank (ECB) and the Federal Reserve of the United States.
Central banks usually also have supervisory powers. These powers are meant to prevent bank runs, and to stop commercial banks and other financial institutions doing reckless or fraudulent things. The relation between central banks and governments varies from country to country.
The chief executive of a central bank is normally known as the Governor, President or Chairman.
- ↑ Sullivan, Arthur; Steven M. Sheffrin (2003). Economics: Principles in action. Prentice Hall. p. 254. ISBN 0-13-063085-3. Archived from the original on 2021-03-04. Retrieved 2021-02-26.
- ↑ "The structure of the Federal Reserve System". federalreserveeducation.org. Archived from the original on 3 October 2010. Retrieved 1 October 2010.