Importance of Central Bank in Global Economy

IMPORTANCE OF CENTRAL
BANK IN GLOBAL ECONOMY

TABLE OF CONTENTS
INTRODUCTION...........................................................................................................................1
MAIN BODY...................................................................................................................................1
CONCLUSION................................................................................................................................1
REFERENCES................................................................................................................................2

INTRODUCTION
The global economy is the world economy or the worldwide economy. It is also the system
of trade and industry across the world that has emerged due to globalization. In this type of
economy there is an exchange of goods and service internationally. It is being expressed in the
monetary units and terms. Present report will lay emphasis on the importance of central bank to
the world economy. It will make reference to European Bank case study. It will also lay
emphasis on is the power of central bank essential to avert the future crisis.
MAIN BODY
The importance of central bank to the world economy
Central Bank could be defined as “Lender of last resort” that means bank is responsible for
providing the economy of nation with the funds where the commercial banks are not able to
provide the funds due to the shortage of funds supply. It prevents the banking systems of the
economy from failing. Primary goal of the central banks is of providing the country with the
currencies with the stability in prices controlling the inflation. Central bank is very important to
the organisation. Role and importance of the central bank in the global economy is explained in
detail in the report.
Central Bank is described as independent national authority which conducts the monetary
policy, provides financial services and regulates bank including the economic research. The goal
of the central bank is of stabilizing the national currency keeping the unemployment low &
preventing the inflations.
Central bank in developing economy performs both traditional as well as the non
traditional functions. Principle role is of issuing notes, banker to government, banker’s bank,
controller of the credit, banker’s bank and for maintaining the stable rate of exchanges. Central
bank aims at promotion as well as maintenance of the rising level of the production, employment
& real income of the economy. They are given with nth powers for promoting the growth of
economies.
Central banks influence the growth of the economy by improving the currency and credit
system. The banks & financial institutions require set up for providing the larger credit facility
and for diverting the voluntary savings in productive channels. Central banks also play important
role in bringing adjustments between the demand and supply of money.
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