Why central banks are evaluated, what is the need for them, and what are their goals? This can be understood better if look at the history of their creation. The central banks appear to have been firmly established in almost all the countries of the world. Economists are convinced that these institutions are necessary or desirable. The evolution of central banking system is essentially a 20th century phenomenon as there were only about a dozen of them at the turn of the 20th century. In contrast, at present, there are nearly 160 central banks
. This is not surprising, since the need for central banks obviously emerged as banking became more complex, while becoming an increasingly important part of the economy over the time. It was, thus, the metamorphosis from the commercial banking as a profit-maximizing bank among many, to non-competitive non-profit-maximizing role that marked the emergence of development of the central bank. Initially, central banks like the Federal Reserve System (1913) and the Swiss National Bank were set up as public-directed institutions designed as non-competitive and non-profit-maximizing. Naturally, they found less difficulty in adapting the country's regulatory role. The Federal Reserve System, which was founded in 1913 and considered to be the most influential policy-making body in the US, defined its goals as managing the country's monetary policy, regulating and supervising banks and monitoring the financial system.
The other central banks were created with certain specific roles. For instance, in the case of Bank of England, the Central Bank of the United Kingdom and sometimes known as the `Old Lady' of Threadneedle Street, was established in 1694, and gained independence in 1997. Its core purpose is to bring monetary and financial stability in the system. In the case of India, the central bank of the country-the Reserve Bank of India (RBI)-was established in 1934 with the passing of a Bill in 1933. The Preamble to the RBI Act laid down its objectives as "to regulate the issue of bank notes and the keeping of reserves with a view to securing monetary stability in India and generally to operate the currency and credit system of the country to its advantage." Unlike most central banks, the RBI was specifically entrusted with an important promotional role, i.e., to finance the agricultural operations and the marketing of crops. As a promotional and developmental role, it created multiplicity of agencies to look after various functions
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