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3. GROUP MEMBERS • ABDUL SABOOR KHAN • YOUNIS WANI • AMINA TARIQ • SEMRA SALEEM • AFFAN AHMED

4. CENTRAL BANK • WHAT IS A CENTRAL BANK ? A central bank is an entity responsible for monetary policy of its country. Its primary responsibility is to stabilize the national currency and money supply, including interest rates; and acting as a lender of last resort to the banking sector and the national financial system as a whole. It may also have supervisory powers to ensure that banks and other financial institutions do not behave frantically or dishonestly.

5. History of Central Bank • Bank of Sweden (1656) was the first Central bank, followed by the Bank Of England (1694) and the Bank Of France (1800). • After the World War 1, the gold standards had declined, this was the main reason why the central banks had such a massive spread all over the world • Brazil was the only independent nation which did not have any central bank, they developed a precursor thereto in 1945 and created its present central bank twenty years later.

6. ROLE OF CENTRAL BANNK IN THE MONEY MARKET 1. Sole right of currency issue 2. Determining Interest rates • Marginal lending rate– A fixed rate for institutions to borrow money from the central bank. • Main refinancing rate – the publicly visible interest rate the central bank announces. It is also known as minimum bid rate and serves as a bidding floor for refinancing loans. • Deposit rate – the rate parties receive for deposits at the central bank.

7. Controlling the nation's entire money supply The main open market operations are: • Temporary lending of money for collateral securities ("Reverse Operations" or "repurchase operations", otherwise known as the "repo" market). These operations are carried out on a regular basis, where fixed maturity loans (of 1 week and 1 month for the ECB) are auctioned off. • Buying or selling securities ("direct operations“) on ad-hoc basis. • Foreign exchange operations.

8. 4. Effective monetary policy Goals of monetary policy • Price Stability • Unanticipated inflation leads to lender losses. Monetary policy is there to maintain steady rate of inflation. • High Employment • Reduction unemployment is the target of macroeconomic policy. • Economic Growth • Economic growth is enhanced by investment in technological advances in production. Encouragement of savings supplies funds that can be drawn upon for investment. This would lead to the good economical stability. • Interest Rate Stability • Volatile interest and exchange rates generate costs to lenders and borrowers. Unexpected changes that cause damage, making policy formulation difficult. 

9. 5. Banker of the State • 6. Supervision of commercial banks. • 7. Lender to the last resort

10. Central Banks of some countries • Afghanistan– Da Afghanistan Bank • Bangladesh – Bangladesh Bank • China – People's Bank of China • United Kingdom – Bank of England •  India – Reserve Bank of India •  Iran – Central Bank of Iran • Palestine – Palestine Monetary Authority Free Template from www.brainybetty.com

11. Central Bank Of Pakistan • In Pakistan, ‘State Bank of Pakistan’ is the monetary authority. The State Bank of Pakistan Act 1956, with subsequent amendments, forms the basis of its operations today. Under the State Bank of Pakistan Order 1948, the Bank was charged with the duty to "regulate the issue of Bank notes and keeping of reserves with a view to securing monetary stability in Pakistan and generally to operate the currency and credit system of the country to its advantage".

12. Main functions and responsibilities of State Bank of Pakistan Primary functions • The primary functions including issue of notes, regulation and supervision of the financial system, bankers’ bank, lender of the last resort, banker to Government, and conduct of monetary policy.

13. Secondary functions • The main functions and responsibilities of the State Bank can be broadly categorized as under. • Regulation of Liquidity • Regulation and Supervision • Exchange Rate Management and Balance of Payments • Developmental Role of State Bank

14. 1. Regulation of Liquidity • Being the Central Bank of the country, State Bank of Pakistan has been entrusted with the responsibility to formulate and conduct monetary and credit policy in a manner consistent with the Government’s targets for growth and inflation and the recommendations of the Monetary and Fiscal Policies Co-ordination Board with respect to macro-economic policy objectives. It abides to the laws of the government and always strives to benefit its country in the best way through its policies. The basic objective underlying its functions is two-fold i.e. the maintenance of monetary stability, thereby leading towards the stability in the domestic prices, as well as the promotion of economic growth.

15. Regulation and Supervision • The fundamental responsibility of the State Bank is regulation and supervision of the financial system to ensure its soundness and stability as well as to protect the interests of depositors. The rapid advancement in information technology, together with growing complexities of modern banking operations, has made the supervisory role more difficult and challenging. The institutional complexity is increasing, technical sophistication is improving and technical base of banking activities is expanding. All this requires the State Bank for endeavoring hard to keep pace with the fast-changing financial landscape of the country.

16. Exchange Rate Management and Balance of Payments • the maintenance of external value of the currency is the important responsibility of the central bank. The Bank is responsible to keep the exchange rate of the rupee at an appropriate level and prevent it from wide fluctuations in order to maintain competitiveness of our exports and maintain stability in the foreign exchange market. To achieve the objective, various exchange policies have been adopted from time to time keeping in view the prevailing circumstances.

17. Developmental Role of State Bank • The responsibility of a Central Bank in a developing country goes well beyond the regulatory duties of managing the monetary policy in order to achieve the macro-economic goals. This role covers not only the development of important components of monetary and capital markets but also to assist the process of economic growth and promote the fuller utilization of a country’s resources.

18. REFERENCES • http://en.wikipedia.org/wiki/Central_bank • www.wordiq.com • www.blurtit.com • www.sbp.org.pk

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