Central banks Flashcards
(7 cards)
1
Q
What is a central bank?
A
The monetary authority and major regulatory banks ina country.
2
Q
What are some functions of a central bank?
A
Issuing the country’s currency
Managing the country’s currency
3
Q
What is central bank interention?
A
When a central bank enters the foreign exchange market to buy or sell currency and influence the exchange rate.
4
Q
What is the base rate?
A
The rate of interest set by the bank of England
5
Q
What is base money?
A
Currency (banknotes and coins) in circulation plus minimum reserves credit institutions are required to hold in the central bank
6
Q
Financial stability
A
The condition in which the financial system is capable of withstanding shocks and financial imbalances
7
Q
What are the main functions of a central bank?
A
- Monetary policy (interest rate/QE)
- Financial stability & regulatory function
- Policy operation
- Financial infrastructure (systems firms use)
- Debt management
