Central banks are institutions that manage a state's currency, money supply, and interest rates. They have a monopoly on increasing the money supply and often print the national currency. The primary functions of central banks are to manage the money supply, act as a lender of last resort during financial crises, promote monetary and financial stability, and oversee the banking system. Central banks also maintain commercial bank reserves and implement monetary policy through tools like open market operations and adjusting interest rates. Several major central banks discussed in the document are the Federal Reserve System, Bank of England, Bank of Japan, and State Bank of Pakistan, each with their own objectives and functions for monetary policy and financial stability.

1. Central Banks

2. • A central bank, reserve bank, or monetary
authority is an institution that manages
a state's currency, money supply, and interest
rates.

3. • In contrast to a commercial bank, a central
bank possesses a monopoly on increasing
the amount of money in the nation, and
usually also prints the national currency.

4. Functions of Central Bank
• The primary function of a central bank is to
manage the nation's money supply, acting as
a lender of last resort to the banking
sector during times of bank insolvency
or financial crisis.
• to promote and maintain monetary stability
and credit and balance of payments
conditions
• to promote and maintain an adequate banking
system

5. • Central banks usually also have supervisory powers,
intended to prevent bank runs and to reduce the risk
that commercial banks.
• Monetary management of the paper currency
becomes easier.
• Being the supreme bank of the country, the central
bank has full information about the monetary
requirements of the economy
• can change the quantity of currency accordingly.

6. • The central bank maintains the cash reserves
of the commercial banks.
• Every commercial bank has to keep a certain
percentage of its cash balances as deposits
with the central banks.
• These cash reserves can be utilized by the
commercial banks in times of emergency.
• Central banks in most developed nations are
institutionally designed to be independent
from political interference.

7. State Bank of Pakistan
• While its constitution, as originally laid down
in the State Bank of Pakistan Order 1948,
remained basically unchanged until January 1,
1974, when the bank was nationalized, the
scope of its functions was considerably
enlarged.
• The State Bank of Pakistan Act 1956,with
subsequent amendments, forms the basis of
its operations today.

8. Functions of SBP
• State bank as a Bank of issue.
• Regulation and supervision of Banks
• Foreign exchange management
• State bank as a clearing house.

9. Framing and operation of monetary
policy
• Main instruments of monetary policy are:
1. Open market operations
2. Reserve system
3. Change the discount rate

10. Federal Reserve System
• Like most industrialized nations, the United
States has a central bank to meet certain
needs of its complex economy and financial
system.
• It consists of a Board of Governors in
Washington, D.C., 12 regional Federal Reserve
Banks and their branches, and the Federal
Open Market Committee.

11. OBJECTIVES OF FED
Three key objectives for monetary policy in the
Federal Reserve Act: Maximum employment,
stable prices, and moderate long-term interest
rates.
• Its duties have expanded over the years, and
today, according to official Federal Reserve
documentation, include conducting the
nation's monetary policy, supervising and
regulating banking institutions, maintaining the
stability of the financial system and providing
financial services to depository institutions, the
U.S. government, and foreign official institutions.

12. Bank of England
• It is the central bank of the United
Kingdom and the model on which most
modern central banks have been based.
• Established in 1694, it is the second oldest
central bank in the world, and the world's 8th
oldest bank.
• The Bank was privately owned by stockholders
from its foundation in 1694 until nationalized
in 1946

13. Functions of BoE
Monetary stability
• Stable prices and confidence in the currency
are the two main criteria for monetary
stability
Financial stability
• Threats are detected by the Bank's
surveillance and market intelligence functions
Asset purchase facility
• high-quality assets financed by the issue of
Treasury bills operations" and thereby
improve liquidity in the credit markets.

14. Bank of Japan
• The Bank is often called Nichigin
• Like most modern Japanese institutions, the
Bank of Japan was founded after the Meiji
Restoration
• The institution was given a monopoly on
controlling the money supply in 1884

15. Functions of BoJ
Task that include are:
• issuing and managing notes and coins;
• implementing monetary policy;
• treasury and government-related securities
activities;
• gathering data, economic analyses and
research activities.

16. Comparison

17. Organizational framework and
institutional features

18. Federal Reserve System

19. Bank of Japan