Topic 9 - Central Banking

Issue government bonds

Control the money supply

Collect taxes

Provide loans to private companies

Napoleon Bonaparte

King William III

George Washington

Queen Victoria

1900

1914

1920

1935

Issue money

Manage government’s finances

Control securities markets

Provide loans during financial stress

Profit from government bonds

Profit from printing money

Profit from lending money

Profit from tax collection

To manage foreign reserves

To control inflation

To regulate stock markets

To provide insurance

Increase government revenue

Control fiscal policy

Stabilize economic growth

Lower taxation

The total amount of reserves

The increase in money supply for each dollar of reserves

The base interest rate set by central banks

The number of loans banks can issue

Currency in circulation

Government bonds

Reserves in the banking system

Vault cash

Central banks raise interest rates

Central banks buy or sell securities

Central banks provide discount loans

Central banks issue new currency