Central Banking Systems

Central banking systems are institutions that manage a country's currency, money supply, and interest rates. They work to maintain economic stability and control inflation by setting monetary policy. Central banks, like the Federal Reserve in the U.S., supervise commercial banks, hold government reserves, and can provide loans to ensure financial stability. They also play a crucial role in regulating the economy by adjusting interest rates, influencing borrowing and spending behaviors. Essentially, central banks act as the backbone of a nation's financial system, aiming to foster a healthy economy and protect it from crises.