What's irreplaceable role in the central bank?

In all the countries in one form or another there is the most important banking institution - the central bank. These banks are not dealing with the public and private firms, and other banks.

Their function is to issue money and control the money supply, interest rates and foreign exchange transactions. It is important to control the money supply.

The main method normally used by the central bank to control money supply, is the purchase or sale of government securities. When the central bank buys from dealers bond market securities, it pays to check that dealers are then deposited in banks. Thus, buying securities, the central bank pumps money into the banking system. On the contrary, when it sells securities, it receives checks that are not deposited in any other bank. Consequently, the sale of securities the central bank withdraws the money from the banking system.

 By monitoring the money supply, the central bank can also change the interest rate on their loans to other banks or to increase or decrease the amount of mandatory bank reserves, installed as a percentage of attracted deposits. Reducing interest rates or reserve requirements of banks expanding credit facilities and, therefore, increases the money supply in circulation. On the other hand, increasing interest rates or reserve requirements leads to a reduction in lending capacity of banks.

Among other things, central banks may seek to control the use of money. In this function they may recommend to the banks to refrain from issuing certain types of loans and, in contrast, provide other types, and can set the value of the initial contributions and the maturity of consumer and mortgage loans and margin sizes (standard margin) when buying securities on credit .

The oldest central banks in Europe are Sweden, "Sveriges riksbank", founded in 1656, and the Bank of England, established in 1694. Over time, there were other central banks, including the U.S. Federal Reserve System (US Federal Reserve System), formed on the basis of federal law in 1913. In most countries, central banks are state-owned, and all the senior executives of these banks are appointed by the government.