Central Banks

A central bank is the predominant monetary authority of a nation. Central banks obey individual economic policies. They are usually under the authority of the government. They facilitate the government’s monetary policies (dealing in keeping the supply and the availability of money) and to make strategies to smoothen out the ups and downs of the value of their currency.

We have earlier discussed about the reserve assets. Central banks are the bodies responsible for holding the foreign currency deposits called “reserves” aka “official reserves” or “international reserves”.

The reserves held by the central banks of a country are used in dealing with foreign-relation policies. The reserves value indicates significant attributes about a country’s ability to service foreign debts; it also affects the credit rating measures of the nation. The following figure shows the central banks of various European countries.

European countries

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