00:00What is a central bank?
00:03A central bank is a country's monetary authority.
00:06It issues the national currency, typically banknotes, as well as coins.
00:12That's why it's the bank of issue.
00:15Think of it as a bank of banks.
00:17It doesn't serve individuals, but works primarily with commercial banks and the government.
00:23In the United States, the central bank is the Federal Reserve, the Fed.
00:28In the Euro area, it's the European Central Bank, the ECB.
00:34Central banks manage monetary policy.
00:37They set key interest rates and regulate the money supply to keep prices stable and fight inflation.
00:45They also oversee commercial banks, helping ensure that risky financial practices don't destabilize the system.
00:52In the U.S., the Fed has another mandate, supporting the economy.
00:57When growth slows, it can lower interest rates to make borrowing easier for consumers and businesses, ideally boosting spending and investment.
01:06During a financial crisis, central banks can step in.
01:10If commercial banks face insolvency, they can provide emergency loans to prevent a domino effect.
01:17That's what happened during the 2008 financial crisis.
01:21Almost every country has a central bank.
01:24One exception is Panama, which uses the U.S. dollar and operates without its own note-issuing institution.
01:31One exception
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