Central Bank

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Central Bank. A financial institution that is the monetary authority and major regulatory bank for a country (or group of countries)

A central bank, reserve financial institution or monetary authority, is a financial institution granted the exclusive privilege to lend a government its currency. Like a normal commercial financial institution, a central bank charges interest on the loans made to borrowers, primarily the government of whichever jurisdiction the financial institution exists in,and to other commercial financial institutions, normally as a lender of last resort.

The Central Bank's functions include issuing and managing the country's currency, controlling monetary policy and supervising money market operations, managing exchange and gold reserves, acting as lender of last resort to commercial banks, and providing banking services to the government. Central banks are state-controlled but are increasingly being given an independent status to insulate them from partisan politics.

See Also


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