Central Bank


DEFINITION of 'Central Bank'

The entity responsible for overseeing the monetary system for a nation (or group of nations). Central banks have a wide range of responsibilities, from overseeing monetary policy to implementing specific goals such as currency stability, low inflation and full employment. Central banks also generally issue currency, function as the bank of the government, regulate the credit system, oversee commercial banks, manage exchange reserves and act as a lender of last resort.


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BREAKING DOWN 'Central Bank'

The central banking system in the U.S. is known as the Federal Reserve System (commonly known as "the Fed"), which is composed of 12 regional Federal Reserve Banks located in major cities throughout the country. The main tasks of the Federal Reserve are to supervise and regulate banks, implement monetary policy by buying and selling U.S. Treasury bonds and steer interest rates. Ben Bernanke currently serves as the chairman of the Board of Governors of the Federal Reserve.

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  4. How is bond yield affected by monetary policy?

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  7. How can central banks use open market operations to manipulate short-term interest ...

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  8. What's the difference between the prime rate and the repo rate?

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  9. What developed countries have the greatest exposure to the automotive sector?

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  10. How did LIBOR come into use?

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  12. What are some examples of expansionary monetary policy?

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