Glossary Term

Central Bank

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Central banks are monetary institutions that are responsible for managing a country or economic region’s commercial banking system, as well as its interest rates and monetary supply. Central banks set interest rates and are the only institutions able to print more money. These are the two main tools they have at their disposal, enabling them to counteract inflation and keep it within a target range. Central banks are supposed to be independent of government interference, their mandate being to manage all of the above regardless of what political party is currently in power. The Federal Reserve is the central bank of the United States, the European Central Bank (ECB) is Europe’s central bank and the Bank of England is the UK’s central bank.

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