Central Banking
INTRODUCTION
Central Banking is one of the most useful institutions which human ingenuity has developed to help the society in managing its collective financial affairs. Every country, these days has a Central Bank which controls its entire banking system. Few countries had a Central Bank in the 19th century, but the popularity of the Central Bank has greatly increased in the 20th century. Today, there is hardly any country in the world which does not have a Central Bank of its own. After the First World War, an International Monetary Conference was held at Brussels in 1929 to find a solution to the problem of recurring economic crisis which confronted the world. This conference recommended the solution to setting up a Central Bank in every country.
The Central Bank occupies a pivotal position in the Monetary and Banking structure of the country. The Central Bank is the undisputed leader of the money market. It supervises controls and regulates the activities of the commercial banks affiliated with it. The Central Bank is also the highest monetary institution in the country charged with the duty and responsibility of carrying out the monetary policy formulated by the government.
India’s Central Bank known as the RESERVE BANK OF INDIA was setup in 1935. The bank of England is the oldest Central Bank in the world. It assumes Central Banking functions in the second half of the 19th century. In America, the Central Bank known as the Federal Reserve System which was established in the year 1930.
DEFINITIONS OF CENTRAL BANKING
Many economists have given different definitions of Central Bank based on functions performed by the central bank. Some of them with economists are as follows:-
“A Central Bank is a bank of bankers. Its duty is to control the monetary base….and through control of this ‘high-powered money’ to control the community’s supply of money.”
--- SAMUELSON
“The essential function of a Central Bank is the maintenance of the stability of
Central Banking is one of the most useful institutions which human ingenuity has developed to help the society in managing its collective financial affairs. Every country, these days has a Central Bank which controls its entire banking system. Few countries had a Central Bank in the 19th century, but the popularity of the Central Bank has greatly increased in the 20th century. Today, there is hardly any country in the world which does not have a Central Bank of its own. After the First World War, an International Monetary Conference was held at Brussels in 1929 to find a solution to the problem of recurring economic crisis which confronted the world. This conference recommended the solution to setting up a Central Bank in every country.
The Central Bank occupies a pivotal position in the Monetary and Banking structure of the country. The Central Bank is the undisputed leader of the money market. It supervises controls and regulates the activities of the commercial banks affiliated with it. The Central Bank is also the highest monetary institution in the country charged with the duty and responsibility of carrying out the monetary policy formulated by the government.
India’s Central Bank known as the RESERVE BANK OF INDIA was setup in 1935. The bank of England is the oldest Central Bank in the world. It assumes Central Banking functions in the second half of the 19th century. In America, the Central Bank known as the Federal Reserve System which was established in the year 1930.
DEFINITIONS OF CENTRAL BANKING
Many economists have given different definitions of Central Bank based on functions performed by the central bank. Some of them with economists are as follows:-
“A Central Bank is a bank of bankers. Its duty is to control the monetary base….and through control of this ‘high-powered money’ to control the community’s supply of money.”
--- SAMUELSON
“The essential function of a Central Bank is the maintenance of the stability of