Mission and Strategy for Central Banking Systems

676 WordsJan 31, 20183 Pages
Mission and strategy What the BoE is for? As a broad sense every central bank has a primary macroeconomic focus on monetary policy which necessitates setting up price stability and in addition establishing institutional support to provide this steadiness. As only issuers of currency (which gives monopolistic power within an economy) central banks have primary obligation to establish a trust and confidence in money and financial institutions. This determines the basics of their monetary policy, simply control over money supply and interest rates. Which means maintaining financial stability- acting as a lender of last resort to commercial banks and other financial institutions during financial distress. Thus, every central bank, including Bank of England, apart from specific cases, has common goal of building up faith in the financial system. So the best answer to the question of “what the Bank of England is for?“ Is given by the original founding charter of the bank: “promote the public Good and Benefit of our people” (reference charter 1694), by up-to-date definition “promoting the good of the people of the UK by maintaining monetary and financial stability”. According to words of the deputy governor of the institution Mark Carney (reference), the best strategic plan to accomplish the fundamental mission of the central bank (greatest contribution to the public good) is maximizing impact to the financial system of the country by working as One Bank. This phrase (One Bank)
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