Activities and responsibilities of central bank

Activities and responsibilities of central bank

I'm pleased to introduce our discussion with a problem of activities and responsibilities of central bank. Without any doubt, central bank has some very essential functions, let's we enumerate some of them:

Firstly, central bank implements monetary policy. Simply, it has all instruments, power and opportunities for it. It is possible for central bank to make monetary policy, because government usually makes central bank independent in such decisions.

It is very important, that central bank determines interest rates. This issue stays very close to a policy of the country and to the aims, which the county has in a particular period of time. Interest rate usually influences a decision of the society, whether to make a deposit or not. Sometimes interest rate decision also concerns a situation at an international financial market. We may consider, that this activity is quite responsible and important.

Also, I would like to speak about money supply. Central bank controls money supply in a whole country and changes it, when it is necessary. Actually, this function is an element of monetary policy. Central bank has to be very accurate in this question. A situation, when there are to mush paper money, brings inflation. In contrast, there shouldn't be not enough paper money, because people make millions transactions with it every day.

It is important, that central bank is a main bank in a country. It means, that central bank makes rules of behavior for all commercial banks in a country. For example, central bank provides refinancing rate. Also, this bank is a lender of last report. It means, that commercial banks can lend money from a central bank, if it is especially necessary.

Of course, Central bank participates in all foreign transactions and foreign exchange, especially, when responsible international financial issues have to be solved. Actually, central bank manages the country's foreign exchange, borrows money, provide loans, supports and controls lots of transactions between international partners.

So, we've covered an information about all important activities in breath, and now it is turn to speak about each particular aim.

Дата добавления: 2015-11-04