Central Bank 2020-05-16 08:00:00

Central Bank

A central bank regulates the money supply, interest rates, and available credit of a nation or several nations (such as with the European Central Bank). In the United States, the central bank is called the FED. Its chairman is Jerome Powell. The FED is able to control the money supply by buying or selling treasury bonds. It regulates the amount of deposits that commercial banks must have. The FED sets interest rates as well and acts as a lender of last resort. In times of financial distress, the FED engages in activities to ensure liquidity across financial markets. These activities can include involvement in the REPO market, bond market, and even purchasing certain ETFs, as was the case in the 2020 financial crisis.

 


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