Economic information .. Know the functions of central banks in the world?
The central bank is solely responsible for deciding how much money a country can print since the suspension of the Golden Rule, as well as making counterfeit currency difficult.
If the bank prints a lot of money, it will increase its supply and thus decrease its value, and thus the purchasing power of the currency, so the central bank should be cautious in this regard as the state (if it controls the central bank) should keep its currency Foliar as a rare source.
In some cases, the central bank is not affiliated with the government. In this case, it is a private bank, not a government bank.
Providing financial services Central banks act as a bank for private and government banks, cashing their checks, lending money to their members, and storing currencies in foreign exchange stores, buying and selling large amounts of foreign currency to affect supply and demand. It also helps regulate exchange rates to control inflation, helps exporters maintain competitive prices, and produces economic statistical reports to guide the country's fiscal policy decisions.
Control of fiscal policies in the country Central banks issue currencies, set interest rates on loans and bonds, and usually raise interest rates to slow growth and avoid inflation, and can reduce them to stimulate growth, industrial activity, in addition to consumer spending in the country, and in this way Central banks monetary policy to guide the state economy, achieve the desired economic goals
Management of financial controls during emergencies Central banks develop and manage financial controls during periods of severe inflationary pressures and supply shortages, especially in times of war. In such circumstances, the government imposes measures to limit borrowing for unnecessary purposes, such as the purchase of consumer goods, or homes, Central banks administer these measures, defining the maximum amount of the loan, and the period during which the funds must be returned.
Impact on Economic Growth in the UAE Central banks affect economic growth by controlling the liquidity allocated to the financial system in the country.
Control how much money banks should have, and what they can lend to individuals.
Using open market operations to buy and sell securities from other banks, where they buy government bonds and mortgage securities and thus stabilize the banking system.
Controlling interest rates for loans and bonds.
Source: Economy Today
