StudentShare
Contact Us
Sign In / Sign Up for FREE
Search
Go to advanced search...
Nobody downloaded yet

The Functions of Modern Central Banking - Case Study Example

Comments (0) Cite this document
Summary
This paper "The Functions of Modern Central Banking" discusses the central banks that have come a long way from just being mere providers of their countries’ currencies and lenders of last resort to banking institutions to being the ultimate monetary authorities in their respective countries…
Download full paperFile format: .doc, available for editing
GRAB THE BEST PAPER91.3% of users find it useful
The Functions of Modern Central Banking
Read TextPreview

Extract of sample "The Functions of Modern Central Banking"

Download file to see previous pages It now directs and supervises banking activities through a complex set of tools and instruments that embody the country’s monetary policies.
Central banking can be traced to the 17th century Swedish Riksbank. The bank was created in 1668 as a joint-stock bank and helped the Swedish government with its monetary needs as well as serve as a clearinghouse for commerce. Just a few decades after, or in 1694, England established its own joint-stock bank called Bank of England. It was established primarily to buy the country’s debts. Other European countries soon followed and established their own national banks not only to serve their debts but also to solve monetary disarray as in the case of France’s Banque de France, which was created by Napoleon Bonaparte to take care of the hyperinflation brought about by the French Revolution (Bordo 1).

The early central banks can be characterized by the duality of their nature: a national bank as well as a private entity. While these banks were primarily set-up to give aid to the monetary needs of their government, they were also at the same time private entities, which offered banking services to banks. Their large reserves and extensive banking networks made them a convenient repository of private banks and hence, they became lenders of the last resort for large financial institutions (Bordo 1).

At the turn of the 20th century, most central banks were established by various countries to rationalize the different currencies being held and used by their citizens as well as provide financial stability and manage the gold standard. The gold standard is the old method of defining currencies by pegging them to fixed gold weights. This was the prevailing method until 1914 where central banks held gold reserves to make currencies convertible to gold anytime. To raise gold reserves, central banks would increase their discount rates or the rates which are used in lending money to banks.  ...Download file to see next pagesRead More
Cite this document
  • APA
  • MLA
  • CHICAGO
(The Functions of Modern Central Banking Case Study, n.d.)
The Functions of Modern Central Banking Case Study. https://studentshare.org/macro-microeconomics/1729238-central-bank
(The Functions of Modern Central Banking Case Study)
The Functions of Modern Central Banking Case Study. https://studentshare.org/macro-microeconomics/1729238-central-bank.
“The Functions of Modern Central Banking Case Study”. https://studentshare.org/macro-microeconomics/1729238-central-bank.
  • Cited: 0 times
Comments (0)
Click to create a comment or rate a document

CHECK THESE SAMPLES OF The Functions of Modern Central Banking

Banking

Depository insurance can be obtained instantly and they are not traded debts since bank incentive take risks and they have no discipline from market prices. Depository insurance have a role of disciplining the management and reduction moral hazard that is, infinite maturity infers that deposits can rapidly disappear; leading to moral hazard; sequential examination also gives a benefit to monitor such services(Pastre?, 2007). Depository insurance helps in ensuring less costly and unnecessary liquidations, duplication of deposits are avoided through monitoring and less probability of runs on solvent thus reducing shock to supply of money at macro level. Depository insurance relates to bank runs in that without monitoring of project...
16 Pages(4000 words)Essay

Banking in the modern world Homework 2

...? FIN335/Banking in the Modern World No: Question No1: The Blue Moon National Bank holds assets and liabilities whose average durations and dollar amounts are as shown in this table: Asset and Liability Items Avg. Duration (years) Dollar Amount (millions) Investment Grade Bonds - L 15.00 $65.00 Commercial Loans – A 3.00 $400.00 Consumer Loans – A 7.00 $250.00 Deposits –L 1.25 $600.00 Nondeposit Borrowings -L 0.50 $50.00 $1365 A. What is the weighted average duration of the Blue Moon’s asset portfolio and liability portfolio? What is the leverage-adjusted duration gap? Total value of portfolios of Assets = Commercial Loan + Consumer Loan = $400 + $250 = $650 Fractional value of assets at = 61.5 = 0.615% Fractional value of assets B = 38.4...
4 Pages(1000 words)Essay

Functions of Unions in Modern Australian Industrial Relations

...Functions of Unions in Modern Australian Industrial Relations Introduction A main transformation in the organization and operations that strengthen industrial relations system in Australia appears to have taken place during the last few years. The tribunal-based systems of conciliate ion and mediation that have created labor-management associations since the spin of the century now play a less critical function, and the systems of honor that maintain to be administered by the assorted tribunals are less central to the fortitude of wages and stipulations. Possibly the most noteworthy change has been the change in the level at which bargaining occurred, from an almost elite focus on industry- and economy-wide contemplations ten years ago...
4 Pages(1000 words)Research Paper

Banking

Not only the internal rating, but also the governance and the quality of risk management will be a major factor in being able to use internal ratings as a basis for calculating regulatory capital requirements.
National supervisors will authorise firms to use one of the internal-ratings based approaches on a case by case basis. Basel II also introduces capital requirements for operational risk, a risk category that was not explicitly addressed under the Basel I rules.
To a large extent, the proposed Basel II was in response to widespread criticism of Basel I. But it also reflected additional thought and analysis of the role of bank capital regulation. In particular, Basel II added two new "pillars" - supervisory review (pi...
15 Pages(3750 words)Essay

Banking

ing overtaken by Dutch giant ING for a measly sum of £1, and exposing the risky environment in which equity corporations scale catastrophic limits in order to make a quick profit.
At the heart of the devastating scam was a person with a huge appetite for risk-taking but hardly any accountability towards the bank, Nick Leeson. Overnight, the unscrupulous futures’ trader from London who was previously the poster boy for Barings’ high-growth earnings from Singapore’s premium monetary exchange, SIMEX (In 1993, he documented nearly 10% of the bank’s profits in futures’ trading), took special advantage of the bank’s vulnerability in no...
10 Pages(2500 words)Essay

Functions

... Functions In the police recruitment process, it is vital to base the hiring process based on an individual’s education level. It may seem like a small issue, but the educational background is crucial in determining the type of individual the would-be officer might turn out to be, while in the line of duty. A high school diploma and at least two years of higher education can work toward guaranteeing that an individual is well-equipped to handle the strain that comes with the task of being an officer. In defense of the above educational requirements, the background can offer recruits an opportunity to be diverse in areas in which they want to explore once in the police force (Ross 263). Furthermore, having an exceptional educational...
2 Pages(500 words)Essay

Functions of GCC Central Bank

...The Gulf Cooperation Council Central Bank’s Functions Affiliation Executive Summary In the near-coming decades, the gulf region is anticipated to have an essential political, social and economic role within the region. The previous three and a half decades have notably experienced tremendous developing interest in monetary integration and currency confederacy. The union is primarily meant to facilitate the adjustment procedures during unfavorable market situations. The currency unification would be constructed by the preceding openness of the countries in the association. Financial bodies are definitely likely to see a myriad of trials and a fresh set of gainful imperatives. The novel set of commercial subtleties will bring significant...
12 Pages(3000 words)Essay

What Are the Main Functions of a Central Bank

...., & GIRARDONE, C. (2006). Introduction to banking. London, Prentice Hall Financial Times. GOODHART, C. A. E. (1995). The Central Bank and the financial system. Cambridge, Mass, MIT Press. HEFFERNAN, S. A. (1996). Modern banking in theory and practice. Chichester, England, Wiley. PETTINGER, R. (2007, January 31). The Function of the Bank of England. EzineArticles. Retrieved May 11, 2008, from http://ezinearticles.com/?The-Function-of-the-Bank-of-England&id=437639...
6 Pages(1500 words)Assignment

Functions of the Central Bank of England

...Functions of the Central Bank with Special Reference to the Bank of England Introduction Financial services are the services provided by the Finance industry. The definition of the term financial services might look very small but the explanation of the term, if written on paper, would make a theory. The research paper would explain a few aspects of financial services to enumerate the role played by it in an economy. Finance industry itself comprises of a large number of organizations such as banks, insurance companies, credit card companies, stock brokerages, consumer finance companies, investment funds and a few government sponsored enterprises. The organizations deal with the management, investment, transfer and lending of money...
19 Pages(4750 words)Coursework

Islamic Banking A Modern Day Business Perspective

...Islamic Banking – A Modern Day Business Perspective Introduction Islamic Banking refers to the banking activities conducted in consistency with the Islamic laws and Principles called Sharia. Islamic Banking supports the development of Islamic economic system through the implementation of different Islamic rules and guidelines for running an economy. There are some major differences in the Islamic Banking and commonly practices banking all over the world mainly due to prohibition of fixed and floating acceptance and payment of interest while lending money. If the transaction is done contrary to the Islamic principle than it is regarded Haram or forbidden according to Islam (Warde, 2000). Historically, the Islamic principles are often...
10 Pages(2500 words)Case Study
sponsored ads
We use cookies to create the best experience for you. Keep on browsing if you are OK with that, or find out how to manage cookies.

Let us find you another Case Study on topic The Functions of Modern Central Banking for FREE!

Contact Us