, and controls the interest rates in a country. Central banks often also oversee the commercial banking system
of their respective countries. In contrast to a commercial bank, a central bank possesses a monopoly on printing the national currency, which usually serves as the nation's legal tender
, and controls the interest rates in a country. Central banks often also oversee the commercial banking system
of their respective countries. In contrast to a commercial bank, a central bank possesses a monopoly on printing the national currency, which usually serves as the nation's legal tender
. Examples include the European Central Bank
(ECB), the Federal Reserve of the United States, and the People's Bank of China
The primary function of a central bank is to provide the nation's money supply, but more active duties include controlling interest rates (monetary policy
), and acting as a lender of last resort
to the banking sector
during times of financial crisis. It may also have supervisory powers, intended to prevent banks and other financial institutions from reckless or fraudulent behaviour. Central banks in most developed nations are independent in that they operate under rules designed to render them free from political interference.
, typically gold
or silver. However, promises to pay were widely circulated and accepted as value at least five hundred years earlier in both Europe and Asia. The Song Dynasty
was the first to issue generally circulating paper currency, while the Yuan Dynasty
was the first to use notes as the predominant circulating medium. In 1455, in an effort to control inflation
, the succeeding Ming Dynasty
ended the use of paper money and closed much of Chinese trade. The medieval European Knights Templar
ran an early prototype of a central banking system, as their promises to pay were widely respected, and many regard their activities as having laid the basis for the modern banking system.
As the first public bank to "offer accounts not directly convertible to coin", the Bank of Amsterdam established in 1609 is considered to be the precursor to modern central banks. The central bank of Sweden ("Sveriges Riksbank
" or simply "Riksbanken") was founded in Stockholm in 1664 and answered to the parliament ("Riksdag of the Estates
") thus making it the oldest central bank still operating today. One role of the Swedish central bank was lending to the government, which was likewise true of the Bank of England
, created in 1694 by Scottish businessman William Paterson
in the City of London
at the request of the English
government to help pay for a war. The War of the Second Coalition
led to the creation of the Banque de France
Although central banks today are generally associated with fiat money
, the 19th and early 20th centuries central banks in most of Europe and Japan
developed under the international gold standard
, elsewhere free banking
or currency board
s were more usual at this time. Problems with collapses of banks during downturns, however, was leading to wider support for central banks in those nations which did not as yet possess them, most notably in Australia
The US Federal Reserve was created by the U.S. Congress through the passing of The Federal Reserve Act in the Senate and its signing by President Woodrow Wilson
on the same day, December 23, 1913. Australia established its first central bank in 1920, Colombia
in 1923, Mexico
in 1925 and Canada
and New Zealand
in the aftermath of the Great Depression
in 1934. By 1935, the only significant independent nation that did not possess a central bank was Brazil
, which subsequently developed a precursor thereto in 1945 and the present central bank twenty years later. Having gained independence, African and Asian countries also established central banks or monetary unions.
The People's Bank of China
evolved its role as a central bank starting in about 1979 with the introduction of market reforms, which accelerated in 1989 when the country adopted a generally capitalist approach to its export economy. Evolving further partly in response to the European Central Bank
, the People's Bank of China has by 2000 become a modern central bank. The most recent bank model, was introduced together with the euro
, involves coordination of the European national banks, which continue to manage their respective economies separately in all respects other than currency exchange and base interest rates.
Activities and responsibilities
- implementing monetary policies.
- determining Interest rates
- controlling the nation's entire money supply
- the Government's banker and the bankers' bank ("lender of last resort")
- managing the country's foreign exchangeForeign exchange marketThe foreign exchange market is a global, worldwide decentralized financial market for trading currencies. Financial centers around the world function as anchors of trading between a wide range of different types of buyers and sellers around the clock, with the exception of weekends...
and gold reserves and the Government's stock register
- regulating and supervising the banking industry
- setting the official interest rate – used to manage both inflationInflationIn economics, inflation is a rise in the general level of prices of goods and services in an economy over a period of time.When the general price level rises, each unit of currency buys fewer goods and services. Consequently, inflation also reflects an erosion in the purchasing power of money – a...
and the country's exchange rateExchange rateIn finance, an exchange rate between two currencies is the rate at which one currency will be exchanged for another. It is also regarded as the value of one country’s currency in terms of another currency...
– and ensuring that this rate takes effect via a variety of policy mechanisms
Monetary policyCentral banks implement a country's chosen monetary policy
. At the most basic level, this involves establishing what form of currency the country may have, whether a fiat currency, gold-backed currency
(disallowed for countries with membership of the International Monetary Fund
), currency board
or a currency union
. When a country has its own national currency, this involves the issue of some form of standardized currency, which is essentially a form of promissory note
: a promise to exchange the note for "money" under certain circumstances. Historically, this was often a promise to exchange the money for precious metals in some fixed amount. Now, when many currencies are fiat money
, the "promise to pay" consists of the promise to accept that currency to pay for taxes.
A central bank may use another country's currency either directly (in a currency union), or indirectly (a currency board). In the latter case, exemplified by Bulgaria
, Hong Kong
, the local currency is backed at a fixed rate by the central bank's holdings of a foreign currency.
In countries with fiat money, the expression "monetary policy" may refer more narrowly to the interest-rate targets and other active measures undertaken by the monetary authority.
Goals of monetary policy
is the time period between jobs when a worker is searching for, or transitioning from one job to another. Unemployment beyond frictional unemployment is classified as unintended unemployment.
For example, structural unemployment
is a form of unemployment resulting from a mismatch between demand in the labour market and the skills and locations of the workers seeking employment. Macroeconomic policy generally aims to reduce unintended unemployment.
Keynes labeled any jobs that would be created by a rise in wage-goods (i.e., a decrease in real-wages
) as involuntary unemployment:
Men are involuntarily unemployed if, in the event of a small rise in the price of wage-goods relatively to the money-wage, both the aggregate supply of labour willing to work for the current money-wage and the aggregate demand for it at that wage would be greater than the existing volume of employment.
—John Maynard KeynesJohn Maynard KeynesJohn Maynard Keynes, Baron Keynes of Tilton, CB FBA , was a British economist whose ideas have profoundly affected the theory and practice of modern macroeconomics, as well as the economic policies of governments...
, The General Theory of Employment, Interest and Money p11
is defined either as the devaluation of a currency or equivalently the rise of prices relative to a currency.
Since inflation lowers real wage
view inflation as the solution to involuntary unemployment. However, "unanticipated" inflation leads to lender losses . Thus, Keynesian monetary policy aims for a steady rate of inflation.
In opposition to Keynes, the Austrian School of economics views inflation simply as a transfer of wealth from currency holders to those who inflate the currency.
Economic growth is enhanced by investment in technological advances in production. Savings can supply funds for investment. However, low interest rates and concomitant high inflation typically provide a disincentive for saving .
Interest rate stability:
s can sometimes include volatile interest rates. This volatility can generate costs to lenders and borrowers . So, central banks set interest rates in order to control the price of money.
Financial market stability:
Foreign exchange market stability:
Conflicts among goals:
Goals frequently cannot be separated from each other and often conflict. Costs must therefore be carefully weighed before policy implementation.
Currency issuanceIn similarity with commercial banks, central banks hold assets (foreign exchange, gold, and other financial assets) and incur liabilities (currency outstanding).
Central banks create money by issuing zero interest currency notes and selling them to the public in exchange for interest-bearing assets such as government bonds. When a central bank wishes to purchase more bonds than their respective national governments make available, they purchase assets denominated in foreign currencies. Income from the interest paid by governments on those bonds is referred to as seigniorage
The European Central Bank
remits its interest income to the central banks of the member countries of the European Union.
The state-sanctioned power to create currency is called the Right of Issuance. Throughout history there have been great disagreements over this power, since whoever controls the creation of currency ultimately controls the entire economy.
Naming of central banksThere is no standard terminology for the name of a central bank, but many countries use the "Bank of Country" form (for example: Bank of England
, Bank of Canada
, Bank of Russia). Some are styled "national" banks, such as the National Bank of Ukraine
; but the term "national bank
" is more often used by privately-owned commercial banks, especially in the United States
. In other cases, central banks may incorporate the word "Central" (for example, European Central Bank, Central Bank of Ireland); but the Central Bank of India
is a (government-owned) commercial bank and not a central bank. The word "Reserve" is also often included, such as the Reserve Bank of India
, Reserve Bank of Australia
, Reserve Bank of New Zealand
, the South African Reserve Bank
, and U.S. Federal Reserve System
. Many countries have state-owned banks or other quasi-government entities that have entirely separate functions, such as financing imports and exports.
In some countries, particularly in some Communist countries, the term national bank may be used to indicate both the monetary authority and the leading banking entity, such as the Soviet Union
(state bank). In other countries, the term national bank may be used to indicate that the central bank's goals are broader than monetary stability, such as full employment, industrial development, or other goals.
Interest rate interventionsTypically a central bank controls certain types of short-term interest rate
s. These influence the stock-
and bond market
s as well as mortgage
and other interest rates. The European Central Bank for example announces its interest rate at the meeting of its Governing Council; in the case of the U.S. Federal Reserve, the Board of Governors
Both the Federal Reserve and the ECB are composed of one or more central bodies that are responsible for the main decisions about interest rates and the size and type of open market operations, and several branches to execute its policies. In the case of the Federal Reserve, they are the local Federal Reserve Banks; for the ECB they are the national central banks.
LimitsContrary to popular perception, central banks are not all-powerful and have limited powers to put their policies into effect. Most importantly, although the perception by the public may be that the "central bank" controls some or all interest rates and currency rates, economic theory (and substantial empirical evidence) shows that it is impossible to do both at once in an open economy. Robert Mundell
's "impossible trinity
" is the most famous formulation of these limited powers, and postulates that it is impossible to target monetary policy (broadly, interest rates), the exchange rate (through a fixed rate) and maintain free capital movement. Since most Western economies are now considered "open" with free capital movement, this essentially means that central banks may target interest rates or exchange rates with credibility, but not both at once.
Even when targeting interest rates, most central banks have limited ability to influence the rates actually paid by private individuals and companies. In the most famous case of policy failure, Black Wednesday
, George Soros
arbitraged the pound sterling
's relationship to the ECU
and (after making $2 billion himself and forcing the UK to spend over $8bn defending the pound) forced it to abandon its policy. Since then he has been a harsh critic of clumsy bank policies and argued that no one should be able to do what he did.
The most complex relationships are those between the yuan
and the US dollar, and between the euro
and its neighbours. The situation in Cuba
is so exceptional as to require the Cuban peso
to be dealt with simply as an exception, since the United States forbids direct trade with Cuba. US dollars were ubiquitous in Cuba's economy after its legalization in 1991, but were officially removed from circulation in 2004 and replaced by the convertible peso
available to central banks are open market operation
, bank reserve requirement
, interest rate policy, re-lending and re-discount (including using the term repurchase market), and credit policy (often coordinated with trade policy). While capital adequacy is important, it is defined and regulated by the Bank for International Settlements
, and central banks in practice generally do not apply stricter rules.
To enable open market operations, a central bank must hold foreign exchange reserves
(usually in the form of government bond
s) and official gold reserves
. It will often have some influence over any official or mandated exchange rate
s: Some exchange rates are managed, some are market based (free float) and many are somewhere in between ("managed float" or "dirty float").
Interest ratesBy far the most visible and obvious power of many modern central banks is to influence market interest rates; contrary to popular belief, they rarely "set" rates to a fixed number. Although the mechanism differs from country to country, most use a similar mechanism based on a central bank's ability to create as much fiat money
The mechanism to move the market towards a 'target rate' (whichever specific rate is used) is generally to lend money or borrow money in theoretically unlimited quantities, until the targeted market rate is sufficiently close to the target. Central banks may do so by lending money to and borrowing money from (taking deposits from) a limited number of qualified banks, or by purchasing and selling bonds. As an example of how this functions, the Bank of Canada
sets a target overnight rate
, and a band of plus or minus 0.25%. Qualified banks borrow from each other within this band, but never above or below, because the central bank will always lend to them at the top of the band, and take deposits at the bottom of the band; in principle, the capacity to borrow and lend at the extremes of the band are unlimited. Other central banks use similar mechanisms.
It is also notable that the target rates are generally short-term rates. The actual rate that borrowers and lenders receive on the market will depend on (perceived) credit risk, maturity and other factors. For example, a central bank might set a target rate for overnight lending of 4.5%, but rates for (equivalent risk) five-year bonds might be 5%, 4.75%, or, in cases of inverted yield curves, even below the short-term rate. Many central banks have one primary "headline" rate that is quoted as the "central bank rate". In practice, they will have other tools and rates that are used, but only one that is rigorously targeted and enforced.
"The rate at which the central bank lends money can indeed be chosen at will by the central bank; this is the rate that makes the financial headlines." – Henry C.K. Liu. Liu explains further that "the U.S. central-bank lending rate is known as the Fed funds rate
. The Fed sets a target for the Fed funds rate, which its Open Market Committee
tries to match by lending or borrowing in the money market
... a fiat money system set by command of the central bank. The Fed is the head of the central-bank because the U.S. dollar is the key reserve currency for international trade. The global money market is a USA dollar market. All other currencies markets revolve around the U.S. dollar market." Accordingly the U.S. situation is not typical of central banks in general.
A typical central bank has several interest rates or monetary policy tools it can set to influence markets.
- Marginal lending rateDiscount windowThe discount window is an instrument of monetary policy that allows eligible institutions to borrow money from the central bank, usually on a short-term basis, to meet temporary shortages of liquidity caused by internal or external disruptions...
(currently 2.00% in the Eurozone) – a fixed rate for institutions to borrow money from the central bank. (In the USA this is called the discount rateDiscount rateThe discount rate can mean*an interest rate a central bank charges depository institutions that borrow reserves from it, for example for the use of the Federal Reserve's discount window....
- Main refinancing rate (1.25% in the Eurozone) – the publicly visible interest rate the central bank announces. It is also known as minimum bid rate and serves as a bidding floor for refinancing loans. (In the USA this is called the federal funds rateFederal funds rateIn the United States, the federal funds rate is the interest rate at which depository institutions actively trade balances held at the Federal Reserve, called federal funds, with each other, usually overnight, on an uncollateralized basis. Institutions with surplus balances in their accounts lend...
- Deposit rate (0.50% in the Eurozone) – the rate parties receive for deposits at the central bank.
These rates directly affect the rates in the money market, the market for short term loans.
Open market operationsThrough open market operation
s, a central bank influences the money supply in an economy directly. Each time it buys securities
, exchanging money for the security, it raises the money supply. Conversely, selling of securities lowers the money supply. Buying of securities thus amounts to printing new money while lowering supply of the specific security.
The main open market operations are:
- Temporary lending of money for collateralCollateral (finance)In lending agreements, collateral is a borrower's pledge of specific property to a lender, to secure repayment of a loan.The collateral serves as protection for a lender against a borrower's default - that is, any borrower failing to pay the principal and interest under the terms of a loan obligation...
securities ("Reverse Operations" or "repurchase operationsRepurchase agreementA repurchase agreement, also known as a repo, RP, or sale and repurchase agreement, is the sale of securities together with an agreement for the seller to buy back the securities at a later date. The repurchase price should be greater than the original sale price, the difference effectively...
", otherwise known as the "repo" market). These operations are carried out on a regular basis, where fixed maturityMaturity (finance)In finance, maturity or maturity date refers to the final payment date of a loan or other financial instrument, at which point the principal is due to be paid....
loans (of one week and one month for the ECB) are auctioned off.
- Buying or selling securities ("direct operationsDirect operationsDirect operations is the term for when a central bank purchases bonds directly from its government.Direct operations work as follows: Governments typically sell bonds when their expenditures exceed revenue from taxes...
") on ad-hoc basis.
- Foreign exchangeForeign exchange marketThe foreign exchange market is a global, worldwide decentralized financial market for trading currencies. Financial centers around the world function as anchors of trading between a wide range of different types of buyers and sellers around the clock, with the exception of weekends...
operations such as forex swapForex swapIn finance, a forex swap is a simultaneous purchase and sale of identical amounts of one currency for another with two different value dates .; see Foreign exchange derivative.-Structure:...
All of these interventions can also influence the foreign exchange market
and thus the exchange rate. For example the People's Bank of China
and the Bank of Japan
have on occasion bought several hundred billions of U.S. Treasuries
, presumably in order to stop the decline of the U.S. dollar
versus the renminbi
and the yen.
Capital requirementsAll banks are required to hold a certain percentage of their assets as capital, a rate which may be established by the central bank or the banking supervisor. For international banks, including the 55 member central banks of the Bank for International Settlements
, the threshold is 8% (see the Basel Capital Accords) of risk-adjusted assets, whereby certain assets (such as government bonds) are considered to have lower risk and are either partially or fully excluded from total assets for the purposes of calculating capital adequacy. Partly due to concerns about asset inflation and repurchase agreements, capital requirements may be considered more effective than reserve requirements in preventing indefinite lending: when at the threshold, a bank cannot extend another loan without acquiring further capital on its balance sheet.
Reserve requirementsHistorically, bank reserves
have formed only a small fraction of deposits, a system called fractional reserve banking. Banks would hold only a small percentage of their assets in the form of cash reserves
as insurance against bank runs. Over time this process has been regulated and insured by central banks. Such legal reserve requirement
s were introduced in the 19th century as an attempt to reduce the risk of banks overextending themselves and suffering from bank run
s, as this could lead to knock-on effects on other overextended banks. See also money multiplier
As the early 20th century gold standard
was undermined by inflation and the late 20th century fiat dollar hegemony
evolved, and as banks proliferated and engaged in more complex transactions and were able to profit from dealings globally on a moment's notice, these practices became mandatory, if only to ensure that there was some limit on the ballooning of money supply. Such limits have become harder to enforce. The People's Bank of China
retains (and uses) more powers over reserves because the yuan
that it manages is a non-convertible currency.
Loan activity by banks plays a fundamental role in determining the money supply. The central-bank money after aggregate settlement – "final money" – can take only one of two forms:
- physical cash, which is rarely used in wholesale financial markets,
- central-bank money which is rarely used by the people
The currency component of the money supply is far smaller than the deposit component. Currency, bank reserves and institutional loan agreements together make up the monetary base, called M1, M2 and M3
. The Federal Reserve Bank stopped publishing M3 and counting it as part of the money supply in 2006.
Exchange requirementsTo influence the money supply, some central banks may require that some or all foreign exchange receipts (generally from exports) be exchanged for the local currency. The rate that is used to purchase local currency may be market-based or arbitrarily set by the bank. This tool is generally used in countries with non-convertible currencies or partially-convertible currencies. The recipient of the local currency may be allowed to freely dispose of the funds, required to hold the funds with the central bank for some period of time, or allowed to use the funds subject to certain restrictions. In other cases, the ability to hold or use the foreign exchange may be otherwise limited.
In this method, money supply is increased by the central bank when it purchases the foreign currency by issuing (selling) the local currency. The central bank may subsequently reduce the money supply by various means, including selling bonds or foreign exchange interventions.
Margin requirements and other toolsIn some countries, central banks may have other tools that work indirectly to limit lending practices and otherwise restrict or regulate capital markets. For example, a central bank may regulate margin lending, whereby individuals or companies may borrow against pledged securities. The margin requirement establishes a minimum ratio of the value of the securities to the amount borrowed.
Central banks often have requirements for the quality of assets that may be held by financial institutions; these requirements may act as a limit on the amount of risk and leverage created by the financial system. These requirements may be direct, such as requiring certain assets to bear certain minimum credit rating
s, or indirect, by the central bank lending to counterparties only when security of a certain quality is pledged as collateral
Examples of useThe People's Bank of China
has been forced into particularly aggressive and differentiating tactics by the extreme complexity and rapid expansion of the economy it manages. It imposed some absolute restrictions on lending to specific industries in 2003, and continues to require between 1% and 3% more reserves from large urban banks (typically focusing on export) than rural ones. This is not by any means an unusual situation. The USA historically had very wide ranges of reserve requirements between its dozen branches. Domestic development is thought to be optimized mostly by reserve requirements rather than by capital adequacy methods, since they can be more finely tuned and regionally varied.
Banking supervision and other activitiesIn some countries a central bank through its subsidiaries controls and monitors the banking sector. In other countries banking supervision is carried out by a government department such as the UK Treasury, or an independent government agency (for example, UK's Financial Services Authority
). It examines the banks' balance sheet
s and behaviour and policies toward consumers. Apart from refinancing, it also provides banks with services such as transfer of funds, bank notes and coins or foreign currency. Thus it is often described as the "bank of banks".
Many countries such as the United States will monitor and control the banking sector through different agencies and for different purposes, although there is usually significant cooperation between the agencies. For example, money center banks, deposit-taking institutions, and other types of financial institutions may be subject to different (and occasionally overlapping) regulation. Some types of banking regulation may be delegated to other levels of government, such as state or provincial governments.
Any cartel of banks is particularly closely watched and controlled. Most countries control bank mergers and are wary of concentration in this industry due to the danger of groupthink and runaway lending bubbles based on a single point of failure
, the credit culture of the few large banks.
IndependenceOver the past decade, there has been a trend towards increasing the independence of central banks as a way of improving long-term economic performance. However, while a large volume of economic research has been done to define the relationship between central bank independence and economic performance, the results are ambiguous.
Advocates of central bank independence argue that a central bank which is too susceptible to political direction or pressure may encourage economic cycles ("boom and bust
"), as politicians may be tempted to boost economic activity in advance of an election, to the detriment of the long-term health of the economy and the country. In this context, independence is usually defined as the central bank's operational and management independence from the government.
The literature on central bank independence has defined a number of types of independence.
Legal independence: The independence of the central bank is enshrined in law. This type of independence is limited in a democratic state; in almost all cases the central bank is accountable at some level to government officials, either through a government minister or directly to a legislature. Even defining degrees of legal independence has proven to be a challenge since legislation typically provides only a framework within which the government and the central bank work out their relationship.
Goal independence: The central bank has the right to set its own policy goals, whether inflation targeting, control of the money supply, or maintaining a fixed exchange rate. While this type of independence is more common, many central banks prefer to announce their policy goals in partnership with the appropriate government departments. This increases the transparency of the policy setting process and thereby increases the credibility of the goals chosen by providing assurance that they will not be changed without notice. In addition, the setting of common goals by the central bank and the government helps to avoid situations where monetary and fiscal policy are in conflict; a policy combination that is clearly sub-optimal.
Operational independence: The central bank has the independence to determine the best way of achieving its policy goals, including the types of instruments used and the timing of their use. This is the most common form of central bank independence. The granting of independence to the Bank of England in 1997 was, in fact, the granting of operational independence; the inflation target continued to be announced in the Chancellor's annual budget speech to Parliament.
Management independence: The central bank has the authority to run its own operations (appointing staff, setting budgets, and so on.) without excessive involvement of the government. The other forms of independence are not possible unless the central bank has a significant degree of management independence. One of the most common statistical indicators used in the literature as a proxy for central bank independence is the "turn-over-rate" of central bank governors. If a government is in the habit of appointing and replacing the governor frequently, it clearly has the capacity to micro-manage the central bank through its choice of governors.
It is argued that an independent central bank can run a more credible monetary policy, making market expectations more responsive to signals from the central bank. Recently, both the Bank of England (1997) and the European Central Bank have been made independent and follow a set of published inflation targets
so that markets know what to expect. Even the People's Bank of China
has been accorded great latitude due to the difficulty of problems it faces, though in the People's Republic of China
the official role of the bank remains that of a national bank
rather than a central bank, underlined by the official refusal to "unpeg" the yuan or to revalue it "under pressure". The People's Bank of China's independence can thus be read more as independence from the USA which rules the financial markets, than from the Communist Party of China
which rules the country. The fact that the Communist Party is not elected also relieves the pressure to please people, increasing its independence.
Governments generally have some degree of influence over even "independent" central banks; the aim of independence is primarily to prevent short-term interference. For example, the chairman of the U.S. Federal Reserve Bank is appointed by the President of the U.S. (all nominees for this post are recommended by the owners of the Federal Reserve, as are all the board members), and his choice must be confirmed by the Congress.
International organizations such as the World Bank
, the Bank for International Settlements
(BIS) and the International Monetary Fund
(IMF) are strong supporters of central bank independence. This results, in part, from a belief in the intrinsic merits of increased independence. The support for independence from the international organizations also derives partly from the connection between increased independence for the central bank and increased transparency in the policy-making process. The IMF's Financial Services Action Plan
(FSAP) review self-assessment, for example, includes a number of questions about central bank independence in the transparency section. An independent central bank will score higher in the review than one that is not independent.
CriticismAccording to the Austrian School
, central banking tends to wreak havoc on an economy by systematically devaluing a currency by over creating this currency against nothing of intrinsic value (such as gold), resulting in never-ending inflation. The main opponents to fractional reserve central banking are the proponents of the Austrian business cycle theory, including Ludwig von Mises
, Friedrich Hayek
and Murray Rothbard
- Fractional-reserve bankingFractional-reserve bankingFractional-reserve banking is a form of banking where banks maintain reserves that are only a fraction of the customer's deposits. Funds deposited into a bank are mostly lent out, and a bank keeps only a fraction of the quantity of deposits as reserves...
- List of central banks
- National bankNational bankIn banking, the term national bank carries several meanings:* especially in developing countries, a bank owned by the state* an ordinary private bank which operates nationally...
- SeigniorageSeigniorageSeigniorage can have the following two meanings:* Seigniorage derived from specie—metal coins, is a tax, added to the total price of a coin , that a customer of the mint had to pay to the mint, and that was sent to the sovereign of the political area.* Seigniorage derived from notes is more...
- State bankState bankA state bank is generally a financial institution that is chartered by a state. It differs from a reserve bank in that it does not necessarily control monetary policy , but instead usually offers only retail and commercial services.A state bank that has been in operation for five years or less is...
- Interbank lending marketInterbank lending marketThe interbank lending market is a market in which banks extend loans to one another for a specified term. Most interbank loans are for maturities of one week or less, the majority being overnight. Such loans are made at the interbank rate...
- Free bankingFree bankingFree banking refers to a monetary arrangement in which banks are subject to no special regulations beyond those applicable to most enterprises, and in which they also are free to issue their own paper currency...
- List of central bank websites at the Bank for International Settlements
- Central Bank Rates: worldwide rates, monetary meetings, central banks
- Interactive map of all the central banks
- International Journal of Central Banking
- The Federal Reserve System: Purposes and Functions – A publication of the U.S. Federal Reserve, describing its role in the macroeconomy
- The Eurosystem – Website of the European Central BankEuropean Central BankThe European Central Bank is the institution of the European Union that administers the monetary policy of the 17 EU Eurozone member states. It is thus one of the world's most important central banks. The bank was established by the Treaty of Amsterdam in 1998, and is headquartered in Frankfurt,...
describing the structure of the central banking system in the EurozoneEurozoneThe eurozone , officially called the euro area, is an economic and monetary union of seventeen European Union member states that have adopted the euro as their common currency and sole legal tender...
– C E V Borio, Bank for International Settlements, Basel