The central bank has been described as "the lender of last resort", which means that it is responsible for providing its economy with funds when commercial banks cannot cover a supply shortage. In other words, the central bank prevents the country's banking system from failing. However, the primary goal of central banks is to provide their countries' currencies with price stability by controlling inflation, but it all comes at a cost backed by the people's security and taxes. A central bank which came from the Rothschild bank of England model also acts as the regulatory authority of a country's monetary policy and is the sole provider and printer of notes and coins in circulation. Time has proved that the central bank can best function in these capacities by remaining independent from government fiscal policy and therefore uninfluenced by the political concerns of any regime. The central bank should also be completely divested of any commercial banking interests. The banking crash of 2008 has caused massive tension across the world and currencies wars have popped up and every country is endebted to the central bank, each other and other banks, its just a circle of nothing that effects society.
Currency war, also known as competitive devaluation, is a condition in international affairs where countries compete against each other to achieve a relatively low exchange rate for their home currency, so as to help their domestic industry. Ahead of G20 conference that will be hosted in the Republic of Korea, it seems that the leading agenda will be about the currency war, the state emerging markets and the stimulus packages by central banks of major economies. We have seen how Central Banks of the various countries in this world announce their stimulus package, the popular one being Ben. S. Bernanke announcing that he will purchase up to $600 Billion Dollars of the US treasuries within the next eight months. Economist from different parts of the world argues that Bernanke’s move can have a crippling effect on the emerging markets. The outbreak of currency war in 2010 has not been warmly welcomed by many head of state. The president of South Africa Mr Jacob Zuma, commenting on the matter said “Leaders around the world must act to prevent the recent round of currency devaluations from turning into a global currency war. We must collectively find an effective solution in the short term.” (Timeslive,2010). It seems that the president is late in his warning because the currency war has already started.
The following are the crippling effect of currency war:
It can lead to a reduction in citizen’s material standard of living.
It can push up inflation.
A strong currency is sometimes seen as a mark of prestige while devaluation is sometimes seen as a sign of a weak government.
For countries such as South Africa, An escalating currency war could make exchange rates highly volatile, sparking protectionism and reducing global trade flows.
List of all 192 central banks in the world - there is only 196 countries in the world
http://www.reserve-bank.com/cb.htm
Since the central bank was created the devaluation of our currencies and standards of living have gone down and a bigger divide between rich and poor has occured
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