most important element of the banking system and its management in any country is the central bank.The functions of this institution are varied and quite interesting, because questions that he does lie in the various spheres of economic life of the state.Its main task is to ensure stability of the national currency within the country and to maintain its exchange rate on the foreign market.
In most cases, the financial institution is not subject to state directly.Often the formal owner of the property of the bank is a state body, but usually the shareholders - private persons.The main functions of the central bank of the country is extremely important and is almost the same for all states:
- first, the Central Bank is the issuer of currency, operating in the country, that is, roughly speaking, is printing money;
- secondly, it acts as the "bank of banks", it serves the needs of commercial financial institutions and monitors the stability of the system as a whole, taking to maintain required reserves;
- Third, it serves as a guide monetary policy, and therefore is implementing a number of actions.
So this is what generally has been any central bank.The functions that it performs in connection with the conduct of monetary policy, are also worthy of attention and without interest, they resonate with its relationship with commercial bankami.TsB control inflation and the exchange rate, and it does so through three financial instruments:
- Management of the money supply.Excessive amounts of money reduces the demand for them and reduces their cost.As a result of the currency in the foreign market is getting cheaper, and inflation accelerated.Rough tool, which seriously affects the processes in the market economy.
- management base interest rate and the amount of required reserves.By decreasing and increasing, these two indicators, the Central Bank also manages the "price" of money and regulates the banking system, through its effect on the supply and demand for money and commodity markets.
- currency intervention.The most commonly used tool that is quite insignificant effect on inflation, but it helps to control the exchange rate of the national currency.When purchasing or selling a backup or the national currency on the open market, the Central Bank can influence its weight in the economy and, consequently, its price.In addition, he may be engaged in the purchase and sale of securities issued by the state.
Central Bank, whose function depends on the country may be narrower or wider, of course, is an essential body in the financial and credit system of the state.In addition to conventional banking, it provides loans to the state, engaged in domestic loans and selling bonds issued by the Ministry of Finance or similar agency.Functions of the Central Bank of Russia, as well as, probably, and other countries do not end there.Most of the Central Bank are also involved in the collection and publication of statistical information on macroeconomic indicators, the establishment of official foreign exchange quotations and other additional tasks.
In the economic system of any country is difficult to find a body that deals with such things as important as the central bank.The functions that it performs, and the tasks that it solves, are so important that without them, perhaps, in a market economy the state simply can not exist.
