Central Banks Definition

A central bank is a financial institution that manages a country’s money supply and interest rates. It also acts as a lender of last resort to the banking sector. Central banks are typically government-owned and controlled, although there are some notable exceptions such as the Bank of England.

The primary function of a central bank is to manage the money supply and interest rates in an economy. This is done in order to achieve macroeconomic goals such as price stability, full employment, and economic growth. Central banks use a variety of tools to do this, including open market operations, reserve requirements, and discount rates.

In addition to managing the money supply, central banks also serve as lenders of last resort to the banking sector. This means that they provide emergency funding to banks when needed in order to prevent them from collapsing and causing a financial crisis.

There are a number of different types of central banks around the world, each with its own unique set of features and functions. However, all central banks share the common goal of promoting economic stability in their respective countries.