20 years: Research & banking
January covers the roles of a Central Bank; how it controls the currency, how it maintains adequate foreign exchange reserves, and how it acts as a lender of last resort.
January covers the roles of a Central Bank; how it controls the currency, how it maintains adequate foreign exchange reserves, and how it acts as a lender of last resort.
10 mins 8 secs
Central banks, also known as ‘banks of banks’, reserve banks or central monetary authorities – of a nation or, as in the case of the Eurozone, a currency bloc – control currencies through printing and coining; monitor and control money supply and inflation (largely through setting interest rates); hold foreign reserves; act as bank regulators; and act as lenders of last resort.
Key learning objectives:
Explain central banks’ clearing and lender of last resort functions
Identify the principal functions of central banks
Learn how central banks control currencies and influence inflation
Learn how interest rates influence foreign exchange reserves
Understand the functions that central banks carry out as regulators