Central Bank Form and Function
Central banks determine currency exchange rates and interest rates, among others. These institutions play a major role in ensuring and promoting the financial stability of a given country. In the US, the role of the Central Bank is delegated to the Federal Reserve. Here, you will learn more about the Federal Reserve and its structure.
What is the difference between central banks, investment banks, and commercial banks? What is the relationship between the Federal Reserve and other central banks?
While reading this, keep in mind what you learned earlier about the Fed and its structure. Here you will learn more about the different branches of the district banks and what they do. You will also come to know about the ECB and how it operates. What does central bank independence mean?
Other Important Central Banks
Key Takeaway
- The European Central Bank (ECB), the central bank of the nations that have adopted the euro, and the larger European System of Central Banks (ECSB), of which it is a part, are modeled after the Fed. Nevertheless, numerous differences of detail can be detected. The ECB's national central banks (NCBs), for example, are much more powerful than the Fed's district banks because they control their own budgets and conduct open market operations. Most of the world's other central banks are structured differently than the ECB and the Fed because they are unit banks without districts or branches. Most are less independent than the Fed and ECB but conduct monetary policy in the same ways.