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Central Banking System

Overview#

Central Banking System is an institution that manages a Jurisdiction's currency, money supply, and interest rates.

Central Banking Systems usually oversee the commercial banking system of their respective Jurisdiction. In contrast to a commercial bank, a Central Banking System possesses a monopoly on increasing the monetary base in the Jurisdiction, and usually also prints the national currency, which usually serves as the Jurisdiction's legal tender.

Central Banking System MAY also act as a "lender of last resort" to the banking sector during times of financial crisis. Most central banks usually also have supervisory and regulatory powers to ensure the solvency of member institutions, prevent bank runs, and prevent reckless or fraudulent behavior by member banks.

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