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Analysis of State Bank of Pakistan

Analysis of State Bank of Pakistan

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Published by Ali Raza Sahni

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Published by: Ali Raza Sahni on May 20, 2011
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10/27/2011

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The State Bank of Pakistan {SBP}
1
Central Bank ing
Introduction
A central bank is anapex institute of the countryabout the monetary point of view. A central bank is theterm, which is used todescribe the authority that isresponsible for policies,which can affect a supply of money and credit in the country.In general, the central bank is a financial institution thatmanages the government’s finance, controls the availability of money and credit to ensure the low inflation, to boost up the highgrowth and stability to financial setup in the economy and controlthe commercial banks.
Prepared by:
Ali Raza / Ali Burhan / Hafiz Mehmeez
 
The State Bank of Pakistan {SBP}
2
In the words of Lipsy, the central bank is defined as
“a bank that acts as banker to commercial banking system and to thegovernment as well. In the modern age, it is a government owned & operated institution that control the banking systemand act as the sole money issuing authority”.
 So by above explanation, we can say that central bank has apivotal position in the banking system and have the ability toregulate & formulate the polices for schedule commercial banks inthe country. And it is also responsible for the financial andeconomical stability of the country.
History About Central Banks
In beginning of the banking sector, the concept about centralbank was not build. There were few of banks on local or zone levelswith their own currency and polices. These financial institutes werethe pioneer of bankingsystem in the history omankind.In
1578,
theconference in Geneva,Switzerland, the economistsof developed countries tookthe decision against the
Prepared by:
Ali Raza / Ali Burhan / Hafiz Mehmeez
 
The State Bank of Pakistan {SBP}
3
metallic or commodity money and introduces the fiat money in theireconomies. The first bank whose considered, as first true central bank was
“Bank of Amsterdam”
established in
1609.
This bank wascreated by Scottish businessman William Paterson to help thegovernment of England in the situation of war.In
1661,
the
“Riks Bank of Sweden”
was established as a joint stock bank to lend the government funds and to act as aclearing house for commerce. And in
1694,
the “Bank of England”was chartered to raise the taxes and borrowing finance to war zone,which was created in the Austria, England, France & the Netherland. The “
Banque de France”
was created in
1800
by NapoleonBonaparte, after the deep recession and hyperinflation in the FrenchRevolutionary period. With the passage of time, the concept of 
Federal Reserve System
in the central bank was emerged in thetwentieth century. According to this concept, the currency is definedin terms of a fixed weight of gold. The central bank held a large goldreserve to ensure that their notes could be converted into gold anytime. So, by this concept central bank is a primarily consolidate whohave ability to issue various instruments which are commonly usedas currency for the public and provide the financial stability to theeconomy.
Prepared by:
Ali Raza / Ali Burhan / Hafiz Mehmeez

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