Central Bank

Definition

The central bank is the highest authority in a country's banking system and is responsible for controlling the money supply, regulating banks, and maintaining financial stability.

Related terms

Monetary Policy: The actions taken by the central bank to control inflation, stabilize prices, and promote economic growth.

Reserve Requirement: The percentage of deposits that banks are required to keep as reserves at the central bank.

Open Market Operations: When the central bank buys or sells government securities to influence interest rates and adjust the money supply.