Finance, Forex and Investments

Somebody in simple term explain to me what is a central bank and where do they get their mone from?

somebody explain in simple terms please. what is a central bank , what is their functions and where do they get money from. please explain simply as possible

Public Comments

1. A central bank is, in each country, the bank which issues the currency of that country, and determines the money supply. The central bank is usually also the banking sector supervisory authority, responsible for monitoring other banks to ensure they are properly managed. Where does a central bank get the money from? The printers - they make it!
2. The structure of central banks differ from county to country and region to region. That said, the easiest way to think of a central bank is the national governments way of organizing and controlling the banking system to pursue national interests. It is NOT a bank in the way you think of a bank. It is more like a Board of Supervisors with specific powers and rules that allow it to oversee and control all the banks to which it has been granted authority. Most central banks have three sources of money: (1) the government that gives it authority, (2) the banks that it controls, and (3) market forces -- its power to act on behalf of the banks it controls in the world wide banking system. Again -- do not think of a central bank as a bank -- it is a Very Powerful Government Agency. The central bank's ability to act on behalf of the government (1 above) and as a market force (3 above) gives it the ability to indirectly borrow and create money. In the case of extremely powerful central banks like the Federal Reserve of the United States, they can quite literally create money out of thin air.