The central bank is an agency within the state apparatus, which are the exclusive bank issued bills and performing the function of state management of monetary operations, credit and banking, the basic goal is stability and safety in the operation of the banking system. Central banks perform management functions not only by laws, administrative measures, but also through the nature of business operations profitably. The central bank had earnings from its assets such as government securities, loan discount, trading on the foreign exchange market ... Double-sided business managers and fastened together in all business is only a means to manage, itself is not the purpose of central banks. Most of the earnings of the central bank, after deducting the operating expenses, are to be paid into the state budget.
The function of central bank
bills issuance bank and regulates the money supply .
associated with the introduction of the central bank released the entire amount to be concentrated in the central bank under the regime of the state monopoly to issue money and has become the center of the country to issue money.
Banknote central Bank issued the legal means of payment, as functional means of circulation and means of payment. Therefore, the issuance of central bank money has a direct impact on cash flow situation of the country. To give value for money to be stable, it requires the release of funds is subject to strict guidelines. The basic principles for the release of the currency has been posed is:
Principles of issuance of money must be secured gold: This principle provides for the issuance of bank bills in circulation must be guaranteed by reserves existing metal in the vaults of central banks. The central bank must ensure the freedom of banks to exchange gold foil statutory foil when people ask. However, applying this principle, each country must have the elasticity of the level of various gold guarantee, it will depend on economic conditions, politics of each country.
The principles and release notes banks through the credit mechanism, is secured by the value of goods and services. Under this mechanism, the release foil gold is not necessarily guaranteed, but released through the short-term credit mechanism, secured on the basis of value of goods, work services, express on commercial promissory notes and other debt documents capable of conversion into money under law. It is a credit of the central bank, is done by means of refinancing for commercial banks. The bank issued bills under this principle, on the one hand it comes from the demand for money arising from economic growth; I on the other hand the possibility of the central bank to carry out the control of money supply volume as required monetary policy.
Today, in conditions of banking banknote circulation is not freely convertible into gold by law, banks in the world goes to issued bills through refinancing mechanism for banks and their activities on the open market by the central bank. At the same time, based on the lone issue money, the central bank carried out the inspection
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