A journalist is interviewing Professor John Webb, an
expert in central banking.What are the main functions of central banks?
Well, most countries have a central bank that provides financial services to the government and to the banking system. If a group of countries have a common currency, for example the euro, they also share a central bank, such as the European Central Bank in Frankfurt.
Some central banks are responsible for monetary policy - trying to control the rate of inflation to maintain financial stability. This involves changing interest rates. The aim is to protect the value of the currency - what it will purchase at home and in other currencies.
In many countries, the central bank supervises and regulates the banking system and the whole financial sector. It also collects financial data and publishes statistics, and provides financial information for consumers. In most countries, the central bank prints and issues currency - putting banknotes into circulation. It also participates in clearing cheques (see Unit 21) and settling debts among commercial banks.