History Of Central Banking, Macro And Micro Functions And Objectives, Relationship With The Government And the Banks

History of central banking

The name of an independent authority of a country at the national level that conducts all the monetary policies of that country is known as the central banking system. The basic aim of the central banking system is to provide the best financial services along with the best economic research facilities. The main goal of maintaining the central banking system is to devise such a plan that ensures the stability of the currency of a nation. If we talk about the history of the central banking, then we come to know that the history of the central bank is not novice for us because the first central bank was formulated in the 17th century under the name of the Swedish Riksbank. It was established in 1668. After the few decades of the establishment of the Swedish Riksbank, in 1694, the most famous central bank, the bank of England was established. Later on, some other banks on the same concept were established in the other European countries. The basic aim of the central banks that were established in the early days was that they were providing the debt and the funding facilities to the government.

Macro and Micro functions and their objectives

There are a lot of students who are confused when they are going to differentiate between the micro and the macro functions in the economics or any other field. For example, if we talk about the micro as well as macro functions in the economics, then we come to know that microeconomics is the name of that economics which is related to study at an individual, a group of particular people or a particular company. On the other hand, if we talk about the macroeconomics, then we come to know that it is the study of economics that is done by us at the national level. The main objective of studying the micro and the macro functions is to study all the objects on the small scale as well as at the large scale. Moreover, these functions are also helpful for us to evaluate the different objects within an organization.

What is the relationship between the government and the banks?

If we take a review of all the modern countries, then we come to know that there is a specific relationship between the government and the banks. This relationship is given below;

  • There are a lot of countries in which the government has either some shares in the central banking system or it is the owner of the central banking system.
  • There are a lot of countries in which the government doesn’t have any share or the ownership of the central banking system. In such countries, the government examines the banking system on the regular basis and publish their reports about the performance of the different banks.
  • Almost all the countries in the world receive a huge amount of revenue from the banking systems in order to run the different government sectors.
  • There are some countries, in which funds are provided to the different organizations in order to run their business on the different conditions.

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