Student Notes 20160428 Ch16.pdf - Central Banking CHAPTER 4...

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Central Banking CHAPTER 4 Generally, government affiliated institutions; its definitions changes over time; very different 100 years ago and will be different 20 years into the future WHAT DO CENTRAL BANKS DO? 1. Implement monetary policy US Fed set interest rates; undertake actions in the financial system to determine interest rates in the economy 2. Act as lender of last resort 2008 bailouts during crisis; central banks were originally set up to the the lender of last resort, not actually monetary policy 3. Act as a bank for the government not used like this all that much one of the original motivations for creation of central banks 4. Financial regulator Fed: a little bit increasing one of the most recent changes to what central banks do; 5. Clearing and processing Fed does this the Federal Reserve is the primary clearing agent, something that is usually done by private companies; 6. Data and research Fed does this
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