Definition of Central Bank

A central bank is an organization within a country which is responsible for setting and using monetary policy in order to adjust the economic performance of the country. The central bank is supposed to be completely independent from the government in order to give it the freedom to do as required.

The absolutely central role of a central bank is to set monetary policy and this will include:

• Setting interest rates
• Manage economic growth
• Controlling the money supply
• Manage inflation against unemployment
• Protect the country from global economic developments
• Ensure financial stability