A central bank is an institution that oversees the currency, supply of money, and interest rates of a nation. The central bank manages commercial banks. The central bank is in charge of printing and coining national currency as well as increasing the monetary base of the its nation. The central bank also can also act as a lender when a financial crisis occurs, and it also regulates member banks to prevent fraudulent behaviors.
In other words, a central bank implements monetary policies, sets the interest rate to maintain exchange rate and inflation, regulated the banking industry, and controls the entire nation’s money supply. Central banks also manage the foreign exchange, government bonds, and gold reserves.
A central bank is a critical component of a nation. These banks are primarily independent, with limited control by legislative and executive bodies. Throughout the world, most countries have central banks. Approximately 75% of the central bank assets of the world are controlled by China, the United States, Japan, and the countries that make up the eurozone. There are also a handful of countries that do not have a central bank. These nations include:
Isle of Man