DISKUSI 2

BAHASA INGGRIS NIAGA

After studying the second session topic entitled What Central Banks Do? and also read the
additional material. Do you agree if every country must have a Central Bank? Why
JAWABAN
A central bank is a public institution that manages the currency of a country or group of
countries and controls the money supply – literally, the amount of money in circulation. The
main objective of many central banks is price stability. In some countries, central banks are also
required by law to act in support of full employment. A central bank is not a commercial bank.
An individual cannot open an account at a central bank or ask it for a loan and, as a public body,
it is not motivated by profit.

Central banks can have a wide range of tasks besides monetary policy. They usually issue
banknotes and coins, often ensure the smooth functioning of payment systems for banks and
traded financial instruments, manage foreign reserves, and play a role in informing the public
about the economy. 

Independent central bank should be able to concentrate on the long-term needs of an economy,
whereas political intervention may be guide by the short-time needs of the government. In the
theory, an independent central bank should reduce the risk of inflation. Some central bank are
legally required to set interest rates so as to hit an explicit inflation target.

Yes, I agree if every country should have a central bank, as we know that, the central bank is an
entity that is responsible for overseeing a country's monetary system. This cannot be separated
from the function of the central bank in the economy itself. 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. A central bank
should also be completely divested of any commercial banking interests.

Sumber referensi:
BMP ADBI4201 Bahasa Inggris Niaga
https://www.ecb.europa.eu/ecb/educational/explainers/tell-me/html/what-is-a-central-
bank.en.html
https://www.investopedia.com/articles/03/050703.asp