LeoGlossary: Central Bank

1 mo
1 Min Read
120 words

An independent authority over monetary policy. They also regulate the banking system, provide financial services, and conduct research.

The Central Bank has control over the monetary base along with the setting of interest rates the banks charge each other. It is a legalized monopoly in that is can issue bank notes and cash.

Although they appear to be part of the government, they are not. Central banks are owned by their member banks who are governed by a board. Therefore, they are theoretically politically independent.

Often the central bank is considered "the lender of last resort" since it is responsible for the troubled banks. It is also known to bail out governments.

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