Module A: Roles & responsibilities

A central bank, reserve bank, or monetary authority is a country’s primary monetary authority, such as the Federal Reserve System in the United States. Central banks usually has responsibility for issuing currency, administering monetary policy, holding member banks’ deposits, facilitating the nation’s banking industry, and acting as a lender of last resort to the banking sector during times of financial crisis (private banks often being integral to the national financial system). It may also have supervisory powers, to ensure that banks and other financial institutions do not behave recklessly or fraudulently.

Most richer countries today have an “independent” central bank, that is, one which operates under rules designed to prevent political interference. Examples include the European Central Bank (ECB) and the Federal Reserve System in the United States. Some central banks are publicly owned, and others are privately owned, however, because central banks must work within the framework of the overall objectives of economic and financial policy established by the government, the description of an independent central bank being “independent within the government” is more accurate.

Executive summary – central banks compared

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This interaction compares the responsibilities and characteristics of the central banks of: South Africa; the United States of America; the United Kingdom; and the European Union.

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