Introduction - Central Banking, Indian Financial system Video Lecture | Indian Financial System - B Com

Welcome to the Investors Trading Academy talking
glossary of financial terms and events.
Our word of the day is “a central bank”
Every country has a central bank, in the U.S.
it is the Federal Reserve, in the UK it is
the Bank of England and for Europe it is The
European Central Bank.
The primary function of a central bank is
to manage the nation's money supply, through
active duties such as managing interest rates,
setting the reserve requirement, and acting
as a lender of last resort to the banking
sector during times of bank insolvency or
financial crisis.
The central bank has been described as "the
lender of last resort", which means that it
is responsible for providing its economy with
funds when commercial banks cannot cover a
supply shortage.
In other words, the central bank prevents
the country's banking system from failing.
However, the primary goal of central banks
is to provide their countries' currencies
with price stability by controlling inflation.
A central bank also acts as the regulatory
authority of a country's monetary policy and
is the sole provider and printer of notes
and coins in circulation.
Time has proved that the central bank can
best function in these capacities by remaining
independent from government fiscal policy
and therefore uninfluenced by the political
concerns of any regime.
The central bank should also be completely
divested of any commercial banking interests.