...This assignment discuss about the central banking system. Central bank also known as the reserve bank, is an independent institution that manages a state’s currency, money supply and interest rate (repo rate), it also supervises the commercial banking system and operate as monopoly (the only firm that has total control over the sector) and act as a banker to the Government. Example of this is the South African Reserve Bank (SARB) as it satisfies all of the above conditions. Most reserve banks like the Reserve bank of South Africa, SARB has the primary purpose, which is to achieve and maintain price stability and sustainable economic growth in their states. Central banks are responsible for the following: controlling the money supply, administers...
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...RESERVE BANK OF INDIA (RBI) INTRODUCTION: The Reserve Bank of India (RBI) is the Central Bank of the country. It was established on April 1, 1935 in accordance with the provisions of the Reserve Bank of India Act, 1934. The Reserve Bank was started as share-holders bank with a paid-up capital of Rs.5 crores. On establishment it took over the function of management of currency from the Government of India and power of credit control from the Imperial Bank of India. The Central Office of the Reserve Bank was initially established in Calcutta but was permanently moved to Mumbai in 1937. The Central Office is where the Governor sits and where policies are formulated. Though originally privately owned, since nationalisation in 1949, the Reserve Bank is fully owned by the Government of India. PREAMBLE: The Preamble of the Reserve Bank of India describes the basic functions of the Reserve Bank as: "...to regulate the issue of Bank Notes and keeping of reserves with a view to securing monetary stability in India and generally to operate the currency and credit system of the country to its advantage." ORGANIZATION OF THE RESERVE BANK: 1. Central Board 2. Local Board 3. Board for Financial Supervision 4. Board for Payment and Settlement Systems 1. CENTRAL BOARD: The Reserve Bank's affairs are governed by a central board of directors. The board is appointed by the Government of India in keeping with the Reserve Bank of India Act. • Appointed/nominated for...
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...preserve monetary stability and the convertibility of the national currency. Responsibilities The BSP provides policy directions in the areas of money, banking and credit. It supervises operations of banks and exercises regulatory powers over non-bank financial institutions with quasi-banking functions. Under the New Central Bank Act, the BSP performs the following functions, all of which relate to its status as the Republic’s central monetary authority. * Liquidity Management. The BSP formulates and implements monetary policy aimed at influencing money supply consistent with its primary objective to maintain price stability. * Currency issue. The BSP has the exclusive power to issue the national currency. All notes and coins issued by the BSP are fully guaranteed by the Government and are considered legal tender for all private and public debts. * Lender of last resort. The BSP extends discounts, loans and advances to banking institutions for liquidity purposes. * Financial Supervision. The BSP supervises banks and exercises regulatory powers over non-bank institutions performing quasi-banking functions. * Management of foreign currency reserves. The BSP seeks to maintain sufficient international reserves to meet any foreseeable net demands for foreign currencies in order to preserve the international stability and convertibility of the Philippine peso. * Determination of exchange rate policy. The BSP determines the exchange rate policy of the Philippines...
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...& INSURANCE CENTRAL BANK A central Bank is a public institution that usually issues the currency, regulates the money supply, and controls the interest rates in a country. The central bank often also oversees the commercial Banking system within its country. A central Bank is distinguished from a normal commercial bank because it has a monopoly and creating the currency of that nation, which is usually that Nations legal tender. Central Bank of Kenya is the highest Banking institution in the country and responsible for ensuring the smooth working of banking sector and other financial institutions. Central Bank differs from commercial banks in that it does not engage in ordinary banking activities e.g. accepting deposits from the general public. It is owned by the government while commercial banks are owned by shareholders. CBK usually implements certain government policies. OBJECTIVES OF CENTRAL BANK OF KENYA i. To formulate and implement monetary policy directed to achieving and maintaining stability in the general level of prices. ii. The Bank fosters the liquidity, solvency and proper functions of a stable market based financial system. iii. Support the economic policy of the government including its objectives for growth and employment. iv. Formulate and implement foreign exchange policy v. Hold and manage its foreign exchange reserves. vi. License and supervise authorized dealers vii. Formulate and implement such policies as best promote...
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...Establishment of the Bank The Central Bank of Kenya was established in 1966 through an Act of Parliament - the Central Bank of Kenya Act of 1966. The establishment of the Bank was a direct result of the desire among the three East African countries to have independent monetary and financial policies. This led to the collapse of the East Africa Currency Board (EACB) in mid 1960s. Structure of the Bank Responsibility for determining the policy of the Central Bank is given by the Central Bank of Kenya Act to the Board of Directors. The Board consists of seven members: - the Governor, who is also its chairman - the Deputy Governor, who is deputy chairman - the Permanent Secretary to the Treasury who is a non-voting member - five other non executive directors All members are appointed by the President to hold office for a term of four years and are eligible for reappointment. In the case of the Governor, appointment is for a maximum of two terms of four years each and can only be terminated by a tribunal appointed by the President to investigate his conduct. The executive management team comprises the Governor, the Deputy Governor and nine heads of department who report to the Governor. The Bank operates from its head office in Nairobi and has branch offices in Mombasa, Kisumu and Eldoret. The Central Bank Act and it's relations with the Government The Central Bank of Kenya Act of 1966 set out objectives and functions and gave the Central Bank limited autonomy. Since...
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...India (RBI) is the nation’s central bank fundamental commitment to maintaining the nation’s monetary and financial stability. From ensuring stability of interest and exchange rates to providing liquidity and an adequate supply of currency and credit for the real sector; from ensuring bank penetration and safety of depositors’ funds to promoting and developing financial institutions and markets, and maintaining the stability of the financial system through continued macro-financial surveillance, the Reserve Bank plays a crucial role in the economy. Our decisions touch the RBI at a Glance Managed by Central Board of Directors India’s monetary authority Supervisor of financial system Issuer of currency Manager of foreign exchange reserves Banker and debt manager to government Supervisor of payment system Banker to banks Maintaining financial stability Developmental functions Research, data and knowledge Sharing Central Board of Directors by the Numbers Official Directors 1 Governor 4 Deputy Governors, at a maximum Non-Official Directors 4 directors—nominated by the Central Government to represent each local board 10 directors nominated by the Central Government with expertise in various segments of the economy 1 representative of the Central Government 6 meetings—at a minimum—each year 1 meeting—at a minimum—each quarter Monetary Authority Issuer of Currency Banker and Debt Manager to Government Banker to Banks Regulator of the...
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...The central bank of the country is the Reserve Bank of India (RBI). It was established in April 1935 with a share capital of Rs. 5 crores on the basis of the recommendations of the Hilton Young Commission. The share capital was divided into shares of Rs. 100 each fully paid which was entirely owned by private shareholders in the begining. The Government held shares of nominal value of Rs. 2,20,000. Reserve Bank of India was nationalised in the year 1949. The general superintendence and direction of the Bank is entrusted to Central Board of Directors of 20 members, the Governor and four Deputy Governors, one Government official from the Ministry of Finance, ten nominated Directors by the Government to give representation to important elements in the economic life of the country, and four nominated Directors by the Central Government to represent the four local Boards with the headquarters at Mumbai, Kolkata, Chennai and New Delhi. Local Boards consist of five members each Central Government appointed for a term of four years to represent territorial and economic interests and the interests of co-operative and indigenous banks. The Reserve Bank of India Act, 1934 was commenced on April 1, 1935. The Act, 1934 (II of 1934) provides the statutory basis of the functioning of the Bank. The Bank was constituted for the need of following: • To regulate the issue of banknotes • To maintain reserves with a view to securing monetary stability and • To operate the credit...
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...through an ordinance in December 1965. This system of note issue is known as minimum Reserve System. The size ofnotes issue reflects the public demand for money. The amount of notes in circulation can be increased to meetthe public demand and are adjusted according to the general level of prices and economic activity in the country. The assets of the Issue Department are always equal to liabilities. 2: FRAMING AND OPERATION OF MONETARY POLICY: The State Bank of Pakistan frames and operators the monetary policy. Monetary policy is conducted by the State Bank of Pakistan to regulate and control the volume of money and credit supply in the country in order to achieve specific economic objectives such as price stability, reducing unemployment, etc. The main instruments of monetary policy are (i) Open market operation. (ii) Changing the reserve requirement and (iii) Changing the discount rate. 3: REGULATION AND SUPERVISION OF BANKS: The State Bank of Pakistan has full powers to supervise and control the banking system in the country. The regulatory powers relate to the licensing of banks, and their branch, expansion, liquidity of assets of banks, management and methods of working of the banks amalgamation and reconstruction and liquidation of banks, inspection of banks etc. 4: FOREIGN EXCHANGE MANAGEMENT: The State Bank of Pakistan acts as custodian of foreign exchange reserves manages exchange control and external value of the rupee and acts as the agent of the government...
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...SIX DEBATES over MACROECONOMIC POLICY SIX DEBATES over MACROECONOMIC POLICY ISSUES | YES | NO | 1. Whether or not monetary and fiscal policymakers should try to stabilize the economy | Advocates of active monetary and fiscal policy view the economy as inherently unstable and believe that policy can manage aggregate demand, and thereby, production and employment, to offset the inherent instability. When aggregate demand is inadequate to ensure full employment, policymakers should boost government spending, cut taxes, and expand money supply. However, when aggregate demand is excessive, risking higher inflation, policymakers should cut government spending, raise taxes, and reduce the money supply. Such policy actions put macroeconomic theory to its best use by leading to a more stable economy, which benefits everyone. | Critics of active monetary and fiscal policy emphasize that policy affects the economy with a lag and that our ability to forecast future economic conditions is poor. As a result, attempts to stabilize the economy can end up destabilizing. It might be desirable if policymakers could eliminate all economic fluctuations, but that is not a realistic goal given the limits of macroeconomic knowledge and the inherent unpredictability of world events. Economic policymakers should refrain from intervening often with monetary and fiscal policy and be content if they do no harm. | 2. Whether or not the government should fight recessions with spending...
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...customers are invested in bonds, securities, etc. At present most of the commercial banks carry the functions of savings banks. Postal department also performs the functions of saving bank. Type 2. Commercial Banks Commercial banks are established with an objective to help businessmen. These banks collect money from general public and give short-term loans to businessmen by way of cash credits, overdrafts, etc. Commercial banks provide various services like collecting cheques, bill of exchange, remittance money from one place to another place. In India, commercial banks are established under Companies Act, 1956. In 1969, 14 commercial banks were nationalised by Government of India. The policies regarding deposits, loans, rate of interest, etc. of these banks are controlled by the Central Bank. Type 3. Industrial Banks / Development Banks Industrial / Development banks collect cash by issuing shares & debentures and providing long-term loans to industries. The main objective of these banks is to provide long-term loans for expansion and modernisation of industries. In India such banks are established on a large scale after independence. They are Industrial Finance Corporation of India (IFCI), Industrial Credit and Investment Corporation of India (ICICI) and Industrial Development Bank of India (IDBI). Type 4. Land Mortgage / Land Development Banks Land Mortgage or Land Development banks are also known as Agricultural Banks because these are formed to finance agricultural...
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...OF THE MONETARY AND CREDIT SYSTEMS DURING THE 19th AND 20th CENTURIES A requirement in English 2 ( Writing in Discipline ) Second Semester SY : 2012 – 2013 TF 7:00 – 8:30 am PRINCE JOHN A. ARCILLA AB – Economics 1 DR. YOLANDA T. TARIMAN PROFESSOR - ENGLISH II FEBRUARY 8, 2013 TABLE OF CONTENTS CONTENTS PAGE PRELIMINARY PAGE Title Page Table of Contents Outline CHAPTERS 1 Introduction Overview of the Topic 2 Discussion 3 Conclusion BIBLIOGPAPHY CURRICULUM VITAE ii INTERNATIONAL BANKING: HISTORICAL SYNTHESIS OF THE BASIC PROBLEMS AND DEVELOPMENTS OF THE MONETARY AND CREDIT SYSTEMS DURING THE 19th AND 20th CENTURIES Thesis Statement: Our historical synthesis focuses on the economic and political aspects of banking, with questions of industrial management and the credit economy taking second place. OUTLINE I CURRENCY AND MONETARY HISTORY IN THE 19th CENTURY 1 From Silver and Bimetal Currency to Gold Standard 2 The Development of the Bank Note into a Legal Tender A Bank Notes and Issuing Banks in England until Mid-19th Century B Peel’s Bank Charter Act C The Banque de France in the 19th Century D Overcoming the Federal System of German Issuing Banks E The United States’ Arduous Journey Towards the Federal System II BANKS AND BANKING FROM THE EARLY PHASE OF INDUSTRIALIZATION TO THE MIDDLE OF THE 19th CENTURY iii 1 Bank Types at the Beginning of the 19th Century A Private Bankers B Public...
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...83694 Established 1 April 1935 Governor Duvvuri Subbarao Central bank of India Currency Indian Rupee ISO 4217 Code INR Reserves US$300.21 billion (2010) Base borrowing rate 7.25% Base deposit rate 6.25% Website rbi.org.in Central Board The Reserve Bank's affairs are governed by a central board of directors. The board is appointed by the Government of India in keeping with the Reserve Bank of India Act. * Appointed/nominated for a period of four years * Constitution: * Official Directors * Full-time : Governor and not more than four Deputy Governors * Non-Official Directors * Nominated by Government: ten Directors from various fields and one government Official * Others: four Directors - one each from four local boards Functions : General superintendence and direction of the Bank's affairs Reserve Bank of India regional office, Delhi entrance with the Yakshini sculpture depicting "Prosperity through agriculture".[25] The central bank till now was governed by 21 governors . The 22nd, Current Governor of Reserve Bank of India is D. Subbarao The regional offices of GPO (in white) and RBI (in sandstone) at Dalhousie Square, Kolkata. delhi bangalore Functions [edit] Monetary authority The Reserve Bank of India is the main monetary authority of the country and beside that the central bank acts as the bank of the national and state governments...
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...What happened on December 23, 1913 at Jekyll Island that has completely changed the landscape of the monetary system in United States? Since its inception in 1913, the Federal Reserve has been the Central Bank of the United States of America. There are many questions about the Federal Reserve:; Its legality, its morality and the intentions of the founders and of those who currently are in authority. Was the Federal Reserve necessary when it was started? Is it necessary now? There is a growing group of people who believe that the role the Fed has taken violates everything our country was founded upon- being a part of the government that is by the people and for the people and that it has not lived up to its mandate of making sound monetary decisions that positively impact the present and future of this great nation. The Federal Reserve is a privately held entity that controls the monetary system of the United States, but has no definable role in government, does not answer to any branch of government for it’s actions; it should be disbanded and replaced to ensure special interests are not in control of the monetary system, while eliminating boom and bust economic cycles and bring back fundamental principles of checks and balance for this country and its economy. To truly understand the Federal Reserve as it is today, what it was intended to be when it first started and if it is still a necessary entity, it’s important to look at its origins. Throughout history, in times of...
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...The Reserve Bank of India, the nation’s central bank, began operations on April 01, 1935. It was established with the objective of ensuring monetary stability and operating the currency and credit system of the country to its advantage. Its functions comprise monetary management, foreign exchange and reserves management, government debt management, financial regulation and supervision, apart from currency management and acting as banker to the banks and to the Government. In addition, from the beginning, the Reserve Bank has played an active developmental role, particularly for the agriculture and rural sectors. Over the years, these functions have evolved in tandem with national and global developments This book aims to demystify the central bank by providing a simple account of the Reserve Bank’s operations and the multidisciplinary nature of its functions. The Bank today focuses, among other things, on maintaining price and financial stability; ensuring credit flow to productive sectors of the economy; managing supply of good currency notes within the country; and supervising and taking a lead in development of financial markets and institutions. The book serves to highlight how the Reserve Bank’s decisions touch the daily lives of all Indians and help chart the country’s economic and financial course. We hope that readers would find the book , authored by the staff of the Bank, useful in getting a better appreciation of the policies and concerns of the Reserve Bank. Dr...
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...Research Paper No. 2006/54 Central Banks as Agents of Economic Development Gerald Epstein* May 2006 Abstract In the last two decades, there has been a global sea change in the theory and practice of central banking. The currently dominant ‘best practice’ approach to central banking consists of the following: (1) central bank independence (2) a focus on inflation fighting (including adopting formal ‘inflation targeting’) and (3) the use of indirect methods of monetary policy (that is, short-term interest rates as opposed to direct methods such as credit ceilings). This paper argues that this neo-liberal approach to central banking is highly idiosyncratic in that, as a package, it is dramatically different from the historically dominant theory and practice of central banking, not only in the developing world, but, notably, in the now developed countries themselves. Throughout the early and recent history of central banking in the US, England, Europe, and elsewhere, financing governments, managing exchange rates, and supporting economic sectors by using ‘direct methods’ of intervention have been among the most important tasks of central banking and, indeed, in many cases, were among the reasons for their existence. The neo-liberal central bank policy package, then, is drastically out of step with the history and dominant practice of central banking throughout most of its history. Keywords: financing, institutions, central banks, history, development JEL classification: E5, N2, O2 ...
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