Centralbank

A central bank is the monetary authority of a country or monetary union with the primary responsibility for issuing currency and for formulating and implementing monetary policy. It acts as the bank for the government and for commercial banks, and it seeks to maintain financial and price stability while supporting the smooth functioning of the economy.

Core functions include managing the money supply and benchmark interest rates to influence inflation and economic activity, and acting as the lender of last resort to financial institutions during periods of stress. Central banks also oversee payment systems to ensure efficient transfer of funds and, in many jurisdictions, regulate or supervise banks and other financial institutions, often in coordination with other regulatory agencies. They typically manage foreign exchange reserves and may intervene in currency markets to influence exchange rates or stabilize markets. In addition, central banks serve as the government’s banker and often handle the issuance of currency.

Governance and independence vary across countries, but most central banks are designed to operate with some degree of independence from short-term political influence, balanced by accountability to elected bodies. Policy decisions are usually made by a committee or board that sets the policy rate and uses other instruments to achieve stated objectives, with regular reporting and transparency.

Prominent examples include the Federal Reserve System in the United States, the European Central Bank for the euro area, the Bank of England, the Bank of Japan, and the Bank of Canada. The concept has evolved to address financial stability, macroprudential oversight, and, more recently, discussions around central bank digital currencies and fintech developments.