Central Bank

A central bank is the primary monetary authority in a country, responsible for regulating the money supply and credit conditions to ensure economic stability and growth. Key functions of a central bank include conducting monetary policy, setting interest rates, controlling inflation, managing foreign exchange and gold reserves, and acting as a lender of last resort to the banking sector during financial crises.

Central banks, such as the Federal Reserve in the United States, the European Central Bank, and the Bank of England, operate independently of political influence to make decisions that are in the long-term interest of the economy. They use various tools, including open market operations, discount rates, and reserve requirements, to influence the money supply and maintain financial stability.

1. The Federal Reserve implementing monetary policy to manage inflation and unemployment.
2. The European Central Bank adjusting interest rates to stimulate economic growth in the Eurozone.
3. The Bank of Japan conducting open market operations to control the yen's value.