Central Bank

A financial institution whose function is to regulate state fiscal and monetary activities.  It is responsible, amongst other things, for the issue of bills and for controlling the flow of a national currency.   Some Central Banks (e.g. The U.S. Federal Reserve Bank and the Deutsche Bundesbank) are owned by private banks; some are owned by the government (e.g.: Banque de France, the People’s Bank of China, and the Bank of England since its nationalization in the 1950s); some are mixed (e.g.: the Belgian Central Bank and the Bank of Japan).  All Central Banks are responsible for the internal stability (i.e. inflation-fighting) and external stability (i.e. value compared to other national currencies) of their national currency. They have a variety of means at their disposal to achieve these aims, including intervention (buying or selling the national currency in the market in exchange for other national currencies); interest-rate fixing; or fixing reserve requirements for the private banks. All these techniques really boil down to fixing the maximum quantity of fiat currency that the private banks will be capable of issuing and at what cost.