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Central bank and its activities

Submitted To:

Teacher Name: Dr. Sujit Saha

Course Name: Banking and Insurance

Program: BBA

Submitted By:

Md. Rabiul Islam Khan

ID. 2966

Date of Submission: 04/08/2012

IBAIS UNIVERSITY

Central bank A central bank, reserve bank, or monetary authority is a public institution that manages a state's currency, money supply, and interest rates. Central banks also usually oversee the commercial banking system of their respective countries. In contrast to a commercial bank, a central bank possesses a monopoly on increasing the nation's monetary base, and usually also prints the national currency, which usually serves as the nation's legal tender. Examples include the European Central Bank (ECB), the Federal Reserve of the United States, and the People's Bank of China, Bangladesh Bank. The primary function of a central bank is to manage the nation's money supply (monetary policy), through active duties such as managing interest rates, setting the reserve requirement, and acting as a lender of last resort to the banking sector during times of bank insolvency or financial crisis. Central banks usually also have supervisory powers, intended to prevent commercial banks and other financial institutions from reckless or fraudulent behavior.. Activities and responsibilities: Functions of a central bank may include:

Implementing monetary policies. determining Interest rates controlling the nation's entire money supply the Government's banker and the bankers' bank ("lender of last resort") managing the country's foreign exchange and gold reserves and the Government's stock register regulating and supervising the banking industry setting the official interest rate used to manage both inflation and the country's exchange rate and ensuring that this rate takes effect via a variety of policy mechanisms

Functions of Bangladesh Bank (Central Bank): Bangladesh Bank performs all the core functions of a typical monetary and financial sector regulator, and a number of other non core functions. The major functional areas include:

Formulation and implementation of monetary and credit policies. Regulation and supervision of banks and non-bank financial institutions, promotion and development of domestic financial markets. Management of the country's international reserves. Issuance of currency notes, Regulation and supervision of the payment system. Acting as banker to the government. Money Laundering Prevention, Collection and furnishing of credit information Implementation of the Foreign exchange regulation Act. Managing a Deposit Insurance Scheme.