Central Bank Law and Legal Definition

The primary monetary authority of a country is known as central bank of that country. In the U.S., central bank is the Federal Reserve System. The central bank is an independent bank operating under rules designed to prevent political interference. The bank provides for government services, association services and customer services. Important functions of the central bank are:

  • issuing currency;
  • administering monetary policy;
  • holding bank deposit; and
  • facilitating banking industry.

Primary function of the central bank is to provide money supply. Personal services provided by the central bank include loans, credit cards, insurance and health saving. Central bank is a lender of last resort. The bank provides loans to government and other commercial banks.