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What are the Functions of Central Bank and how does it Help the Economy ?

Some Common Functions of Central Banks across the Globe

The authority and scope of operation of a central bank varies from nation to nation. In spite of the differences, some particular operations usually executed by the central banks are:

  • Central Bank issues a country’s currency.
  • It is the controller and care taker of the global exchange funds of the nation.
  • One of the major responsibilities of a central bank is that it is the government’s investor.
  • Not only does it serve the government, it is also a financier for commercial banking institutions.
  • Having the powers of a financial controller, it administers the banks’ mortgage generation operations and functions as a regulator of loans.
  • If contributes to the economic growth of the nation.

European Central Bank (Eurozone Central bank)

The prime purpose of the European Central Bank is to sustain cost solidity in the Eurozone. Its fundamental responsibility is to place and employ the fiscal procedure for Eurozone, to accomplish foreign exchange functions, caretaker of the global funds of the European System’s Central Banks and function of the monetary market conditions.

Federal Reserve System (US Central Bank)

The most basic functions of Federal Reserve are to achieve maximum employment levels, price solidarity in the market and to stabilize interest rates for longer duration. Although there are many more modifications that have been involved and now administering commercial banks, stabilizing the financial conditions as well as offering monetary support to depository organizations and to the government is also included.

Bank of England (UK Central Bank) and German Federal Bank (German Central Bank)

German Federal Bank is the central banking institution of Germany and serves as a significant element of ESCB. It has to partake in the deliverance of the tasks assigned by ESCB. Some of the mandate responsibilities are sustaining monetary stability and administering local and global payments. Similarly the main objectives of Bank of England are to secure the financial conditions and the ability to purchase massive assets with Treasury Bills to maintain pecuniary liquidity.


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