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A central bank, reserve bank, national bank, or monetary authority is an institution that manages the currency and monetary policy of a country or monetary union.[1] In contrast to a commercial bank, a central bank possesses a monopoly on increasing the monetary base. Many central banks also have supervisory or regulatory powers to ensure the stability of commercial banks in their jurisdiction, to prevent bank runs, and in some cases also to enforce policies on financial consumer protection and against bank fraud, money laundering, or terrorism financing. Central banks play a crucial role in macroeconomic forecasting, which is essential for guiding monetary policy decisions, especially during times of economic turbulence.[2]

Central banks in most developed nations are usually set up to be institutionally independent from political interference,[3][4][5] even though governments typically have governance rights over them, legislative bodies exercise scrutiny, and central banks frequently do show responsiveness to politics.[6][7][8]

Issues like central bank independence, central bank policies and rhetoric in central bank governors discourse or the premises of macroeconomic policies[9] (monetary and fiscal policy) of the state are a focus of contention and criticism by some policymakers,[10] researchers[11] and specialized business, economics and finance media.[12][13]

  1. ^ Compare:Uittenbogaard, Roland (2014). Evolution of Central Banking?: De Nederlandsche Bank 1814–1852. Cham (Switzerland): Springer. p. 4. ISBN 9783319106175. Archived from the original on 1 July 2023. Retrieved 3 February 2019. Although it is difficult to define central banking, ... a functional definition is most useful. ... Capie et al. (1994) define a central bank as the government's bank, the monopoly note issuer and lender of last resort.
  2. ^ Lucia, Alessi; Eric, Ghysels; Luca, norante; Richard, Peach; Simon, Potter (2014). "Central Bank Macroeconomic Forecasting During the Global Financial Crisis: The European Central Bank and Federal Reserve Bank of New York Experiences". Journal of Business & Economic Statistics. 32 (4): 483–500. doi:10.1080/07350015.2014.959124. hdl:10419/154121.
  3. ^ David Fielding, "Fiscal and Monetary Policies in Developing Countries" in The New Palgrave Dictionary of Economics (Springer, 2016), p. 405: "The current norm in OECD countries is an institutionally independent central bank ... In recent years some non-OECD countries have introduced ... a degree of central bank independence and accountability."
  4. ^ "Public governance of central banks: an approach from new institutional economics" (PDF). The Bulletin of the Faculty of Commerce. 89 (4). March 2007. Archived (PDF) from the original on 9 October 2022.
  5. ^ Apel, Emmanuel (November 2007). "1". Central Banking Systems Compared: The ECB, The Pre-Euro Bundesbank and the Federal Reserve System. Routledge. p. 14. ISBN 978-0415459228.
  6. ^ "Ownership and independence of FED". Archived from the original on 25 March 2020. Retrieved 29 September 2013.
  7. ^ Deutsche Bundesbank#Governance
  8. ^ Binder, Sarah A.; Spindel, Mark (2017). The Myth of Independence: How Congress Governs the Federal Reserve. Princeton Oxford: Princeton University Press. ISBN 978-0-691-16319-2.
  9. ^ Scholvinck, Johan. "Making the Case for the Integration of Social and Economic Policy". UN Division for Social Policy and Development. Archived from the original on 18 November 2007.
  10. ^ Inskeep, Steve (24 June 2022). "The Fed's latest interest rate hike has some congressional lawmakers worried". NPR. Archived from the original on 11 March 2023. Retrieved 11 March 2023.
  11. ^ "Fed's rate hikes likely to cause a recession, research says". AP NEWS. 24 February 2023. Archived from the original on 14 March 2023. Retrieved 11 March 2023.
  12. ^ Koop, Christel; Scotto di Vettimo, Michele (20 September 2022). "How do the media scrutinise central banking? Evidence from the Bank of England". European Journal of Political Economy. 77: 102296. doi:10.1016/j.ejpoleco.2022.102296. ISSN 0176-2680. S2CID 252426183.
  13. ^