Role of Central Banks in Dissertation

Studies along with archived information will help in terms of data collection methods. I expect to understand in detail the inner workings of certain central banks. I also will be able to determine if central banks are necessary. I also plan and finding what central banks have done to help or deter economic prosperity.

Introduction

Central banks like the Federal Reserve play a crucial role in monitoring and regulating the economy of a country. For the central bank to exist within this role it must have several methods and strategies in place to carry out its purpose, which is to provide financial stability for the country. What is a central bank? What kinds of strategies should be adopted to generate regulation and effective monitoring?

Although the initial role of central banks was developed more than several centuries ago, it was not until the mid-nineteenth century that the power of monopoly came into effect for central banks.Central banks could issue banknotes and act as lender of last resort. From that point on the role of central banks was that of liquidity provider and lender of last resort. The intention was to "allow a proper functioning of the payment system, so financial stability was implicitly a major concern for central banks." (Gregorio 2013)

Gradually central banks evolved and began having goals of price stability through controlling inflation. Financial stability took secondary importance. "Moreover, some scholars and practitioners argued that price stability should be the only objective of central banks, so that the goal would be more credible and monetary policy more effective in achieving stability. " (Gregorio 2013) Although there is merit in price stability, it decreases the power overall of the central bank.....