Caderno 03

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BCV notebooks
Financial Education Series
WHAT IS ONE
CENTRAL BANK CENTRAL BANK CENTRAL BANK
Bank of Cape Verde

Beach
Datasheet
Title
What is a Central Bank - Notebook nº 3
Author
Bank of Cape
Editor
Verde Bank of
Cape Verde
Av. Amilcar Cabral - CP 101, Praia - Cape Verde

Collection
Tel: (+238) 260 71 80/81 - Fax: (+238) 261 44 47
Series
Bank of Cape Verde notebooks
Illustration and Maquet.
Financial education
Print
PC-Arte
Drawing
Typography Santos, Lda
2000 copies
Index
Presentation.................................................7
The Origin of Central Banks....................9
The Functions of Central Banks.............10
The instruments of
Monetary Control...................................12
Other Interventions
of Central Banks.................................14
Bank of England..................................16
Bank of Cape Verde...................................17
Central Banks and
Regional Integration.................................22
The Requirement of Independence.................25
Central Banks of the World..................................27
Bibliography…..............................................33
“There have been three great inventions

over time: fire, the wheel and central banks.”
Will Rogers
Financial Education Notebook
3
Presentation
This notebook aims to provide readers with a small
trip inside the central banks, with the main objective of
important way of visualizing the importance of these Institutions
have for our daily lives. Throughout it there will be a brief
historical retrospective, also addressing topics such as
emergence of central banks.
Whenever an economy depends on a currency system
legal tender, as is the case in Cape Verde, it is necessary
the existence of a body responsible for regulating the
system. In Cape Verde, this body is the Banco de Cabo Verde.
If you look at a escudo note, you will see that it has
the name Banco de Cabo Verde is registered. The Bank of
Cape Verde is an example of a central bank, that is, a
institution responsible for supervising the banking system and
regulator of the quantity of money in the economy. Beyond the Bank

of Cape Verde there are other central banks in the world such as
the United States Federal Reserve, the Bank of England,
the Bank of Japan and the German Bundesbank.
Central banks play an important role in society, as they are the guarantor of
price stability, contributing to improving the health of the national economy and
thus promoting an increase in
social well-being.
Central Banks must also encourage free movement
of information, providing citizens with knowledge
necessary to analyze and better understand the markets
financial. Based on the knowledge acquired, the
economic agents will be able to demand their rights and
to fulfill their duties. In this way, citizens will be able to
have greater participation in the country's economy and exercise
full citizenship.
What is a Central Bank 7

two
The Origin of Central Banks

Central banks appeared gradually, mainly to respond to the needs of the financial
institutions that then proliferated in Europe, from the 16th century onwards. The origin of
banks is closely linked to the emergence and evolution of currency.
Initially, people were not concerned about keeping their money in banks; these didn't even
exist. Money was hidden at home in a variety of places – in safes, cylinders, or buried.
The closest experience to the current banking system was that which occurred in the
Middle Ages when, for reasons of security and convenience, people – traders, artisans,
government officials, among others – began to deposit their money in banks, receiving in
return a paper, or receipt, representing the amount deposited.
As time passes, the

people started to
understand the benefits of using a
bank and receipts
delivered by bankers have become

popular means of payment. Thus, it
evolved from metallic currency to
paper money, with the emergence
of what were then called banknotes,
documents issued by banks, under
government approval. Banknotes quickly became the main form of money, and they were
also deposited in banks. Banks proliferated, each issuing a different type of banknote,
each putting into circulation banknotes that were not always trustworthy.
At the same time, another phenomenon is taking place in countries such as England and
other European countries. Banks became financiers of the dreams and battles of kings
and rulers, providing them with money to carry out expeditions to conquer distant lands
or, alternatively,
What is money 9
3
for expenses incurred in wars fought against other nations. In exchange for
the amounts lent, kings and rulers granted banks the monopoly on issuing
banknotes. This allowed the issuing bank to have a prominent position, with
its banknotes accepted by everyone.
The Bank of England was one

of the first banks to receive
these privileges and was the
first central bank to be created, in
1694. Other central banks
appeared during the
19th and 20th centuries: the Bank of
France, in 1800, Germany, in 1875, Japan,

in 1882, Italy, in 1893, and the United States, in 1913. In the 1920s, the
Brussels Conference encouraged the creation of central banks (CB) in all
countries. Between 1929 and 1952, 48 BCs were created, the majority in
Latin American countries. In the 60s of the same century, almost every
country in the world had its BC. Brazil was one of the rare exceptions, until
1964, when the Central Bank of Brazil was created.
The Functions of Central Banks

In different countries, banks concentrated certain functions.
However, there are four that give the Central Bank its identity:
Government banker: he is the one who keeps the government's

international reserves in gold or foreign currency. Reserves are
very important, as they allow business to be done with other
countries, that is, they allow the country to import by purchasing
products that it does not produce. Generally, payments are made
using generally accepted currencies, such as the US dollar, the
euro (from the European Union) and the yen (from Japan). Part of
the reserves is kept in the coffers of Central Banks, the other is
deposited in banks abroad to earn interest for the country;
10 What is a Central Bank

3
Currency issuing authority, with issuance monopoly: it is the central

bank that, exclusively, issues or authorizes the issuance of the country's
paper money;
Executor of monetary and exchange rate policy: it is the central bank

that puts currency into circulation or withdraws currency from the market,
regulates interest rates and the quantity of currency in circulation in the country.
In this context, it carries out operations, some known as open market or
open market operations, which essentially consist of buying and selling
securities, with the aim of influencing the supply of funds in the capital
market and, thus, rates short-term interest rate and credit volume.
Bank of Banks, or lender of last resort: the central bank provides

exclusive loans to banking system institutions, in order to regulate liquidity
or even avoid bankruptcies that could cause chain reactions. It also
maintains the mandatory deposits of commercial banks, thus regulating
the quantity of currency in the market.
In addition to these functions, there are banks, such as Banco de Cabo Verde (BCV),
which have the important task of supervising financial institutions. Banco de Cabo
Verde is also responsible for regulating, supervising and promoting the proper
functioning of payment systems, managing

3
the country's external resources and act as an intermediary for the State's international
monetary relations, as well as advising the Government in the economic and financial
fields. BCV is also responsible for collecting
and preparation of monetary, financial, exchange rate and balance of payments statistics.
Monetary Control Instruments
The central bank is the entity responsible for issuing currency. It has at its disposal a
certain number of monetary policy instruments, which allow it to control the money
supply and interest rates and which favor the achievement of monetary policy
objectives. To carry out this, Banks use instruments or manipulate policy variables that
are under their control, namely: open market operations, rediscount rate and legal
reserves. These tools allow monetary authorities to directly or indirectly control liquidity
in the economy. The ultimate objective of monetary policy is price stability.
Open Market Operations or Open Market
The central bank carries out open market operations when it buys or sells securities.
Depending on market conditions, the central bank may choose to buy or sell securities. A
central bank that pursues expansionist objectives,

that is, that intends to increase the quantity of
currency in circulation, will choose to purchase
bonds, as, by paying for the bonds, it will
influence the money supply, increasing it. O
increase in the money supply will have a
significant effect on consumption and loans,
tends to reduce interest rates and has a positive impact on aggregate demand. But if
what the central bank wants is

3
reduce the money supply, then it will proceed in the opposite way: it sells securities,
receiving in exchange the corresponding currency and, in this way, reduces the quantity
of currency in circulation. Restrictive policies typically have an effect on loans, which
tend to become more expensive.
Legal Reserves
The monetary authorities
require commercial banks to maintain a

reserve with the central bank
representing the portion of deposits
received from the public. This instrument
makes it possible to act directly on the
level of bank reserves. An increase in
Reserve requirements mean that banks have to maintain larger reserves, which
translates into a reduction in their credit granting operations, reducing the economy's
liquidity. In turn, a decrease in reserve requirements will have the opposite effect,
enabling an increase in liquidity in the economy as a whole.
Rediscount Rate
The discount rate is the interest rate that central banks charge on loans they grant to
commercial banks. When a central bank grants a loan to a commercial bank, it increases
the banking system's reserves, thus allowing more money to be created. This instrument
allows you to change the money supply, according to the type of policy, expansionary
or restrictive. A restrictive policy translates into an increase in the discount rate, which,
in turn, reduces loans from the central bank, reduces the amount of reserves and the
money supply. Expansionary policy has the opposite effect. This instrument, in addition
to allowing control of the currency supply, is also used to help financial institutions in
difficulty.

3
Other Central Bank Interventions

Central Banks play an extremely important role, as they are responsible
for managing reserves and the exchange rate and monitoring
international financial developments.
Reservation Flows
In addition to the currency held by nationals, the supply of currency is

conditioned by the currency held by foreigners1 . Deposits by foreigners
in the banking system produce increases in the total amount of bank
reserves, in the same way as deposits made by residents of the country.
The variation in the total amount of
currency held by foreigners can cause
the expansion or contraction of the
currency supply in the country, meaning
that the control of bank reserves by the
central bank is conditioned to external
shocks.
The Bank can nullify these disturbances
through sterilization operations, that is,
actions by the Bank that aim to isolate
the money supply
internal flow of reserves.
It generally involves the implementation
of open market operations.
The role of the exchange system
The exchange rate system plays an important role in a country's financial

market. There are different systems, ranging from fully floating rates to
fixed rates, passing through intermediate systems. In exchange rate
systems
1 Currency held by non-residents

3
floating, the rate is entirely determined by
market forces, through the game of supply
and demand. In those with fixed exchange
rates, countries set and defend certain
exchange rates
exchange. In countries where the rate is floating, as

is the case in the United States and Japan, monetary
authorities can pursue their monetary policies
independently of those of other countries. Other
countries such as Cape Verde2 have fixed exchange
rate systems, linking their currencies to the currency of one or more countries. In this
system, the country is conditioned and obliged to align its monetary policy with that of
the anchor country or countries.
Performance in the foreign exchange market
Central banks can also act internationally to safeguard the country's interests. By buying
and selling currency, the central bank tries to counteract the volatility of the foreign
exchange market and stop changes in the value of the currency. Its biggest concern is to
prevent high levels of volatility in the short term and excessive fluctuations in exchange
rates in the long term, beyond established limits, from harming the economy, especially
the sectors most involved in international trade. A
Purchase of foreign currency is associated with a decrease in the value of the

exchange rate of the national currency, while the sale is associated with an appreciation
of the exchange rate of the national currency.
2 Within the scope of the Foreign Exchange Cooperation Agreement and the respective
Additional Protocol, signed between the Portuguese and Cape Verdean Governments, the
Cape Verdean escudo (CVE) began to be linked, from April 1, 1998, in a parity
relationship fixed, to the Portuguese currency (PTE) and, subsequently, to the EURO.

3
Bank of England
The Bank of England was the first financial institution to have monopoly
issuing functions and to play the role of banker to the government. It
was founded in 1694, in a context of war between England and France,
when, in exchange for loans granted to the English government, King
William of Orange granted it a monopoly on emission in the London
region.
Its position was strengthened

with the support of legislation
that allowed it to gain relative
share as an issuer, while at
the same time reinforcing its
position as government
banker. Due to the great
prestige and reliability
achieved, other banks began
to make guarantee deposits
with the
Bank of England. This provided
a certain stability to the financial system, especially during the 17th to
19th centuries, when there was a proliferation of small banks.
By assuming itself as the depository of the reserves of other banks, the

Bank of England began, from the mid-19th century, to offer “clearing”
services for transactions carried out between banks, thus assuming the
role of the Bank of Banks.
Being the main issuer and depository of the banking system's reserves
allowed the Bank of England to establish itself as a lender of last resort,
supporting small institutions with credits that gave them the capacity to
continue to exist.
In 1946, following its importance for the English financial system, the
Bank was nationalized, officially assuming the role of
Central bank.
3
Bank of Cape Verde
The Bank of Cape Verde (BCV) was created on September 29, 1975, through Law No.
25/75, with the functions of Central Bank and Issuer, Exchange Authority, Treasury Bank
and Commercial Bank. The Banco de Cabo Verde succeeded the Banco Nacional
Ultramarino, which was for 111 years the main banking institution in Cape Verde, and the
National Development Bank.
Similar to what happened in the history of

Central Banks, it was
assigned to the National Bank
Overseas the privilege of the monopoly on

banknote issuance by the kingdom of
Portugal, during the colonial period,

through the law letter of May 16th
1864. The National Bank
Ultramarino began by limiting its activities to

the city of Praia,
but in 1894 he established the S. Vicente
Agency and, in 1948, the Sal Delegation, complemented by correspondence in all county
seats.
The activities of Banco Nacional Ultramarino involved receiving interest-bearing deposits,

as well as accepting bills and selling drafts on the country. It progressively expanded its
operations, until, in 1973, the National Development Bank was installed, with the aim of
providing the country with an institution for granting medium and long-term credits.
The financial sector was then made up of Banco Nacional Ultramarino, Banco de Fomento
Nacional, Caixa de Crédito de Cabo Verde, Caixa Económica Postal and the Banking
Commerce Inspection.
Caixa de Crédito de Cabo Verde operated in the granting of credit
agricultural, livestock, industrial and real estate, with a view to the development of Cape
Verde, while Caixa Económica Postal financed consumer credits and captured small
savings. Regarding Inspection

3
of Banking Commerce, was created in 1963, with the aim of ensuring the regular functioning
of the foreign exchange market, of establishing the exchange rates that the representations
of Banco Nacional Ultramarino should observe, of monitoring
compliance with legal and regulatory provisions on the
exercise of foreign exchange trading, among others.
The Banco de Cabo Verde (BCV) was created following Cape

Verde's independence, which occurred on July 5, 1975, with the
firm purpose of providing the country with necessary and
capable institutions for the realization of its sovereign rights,

including the right
of issuing currency. On July 1, 1976,
the transfer of the liabilities and assets of Banco Nacional

Ultramarino and Banco de Fomento Nacional to Banco de Cabo Verde, marking the
beginning of BCV's public activities, with multiple functions. Another fact that gave the
country its identity occurred on July 1, 1977, with the entry into circulation of the Bank's
first notes, the Cape Verde Escudo, replacing the
notes from Banco Nacional Ultramarino.
The 1980s were dedicated to the implementation of programs that gave the Bank greater
dynamism, namely:
Approval of a Staff Regulation;
Beginning of the computerization of the various central services;
Banking of the country, through the creation of a network of branches in almost
all county seats, substantially improving banking coverage across the country;
Development of support programs for the productive sector, through the
creation of special incentives for emigrants, as well as the various sectors of

activity considered
priorities by the Government, having created for this purpose the

3
Investment Department to manage these programs and others that were the
responsibility of Caixa de Crédito de Cabo Verde, which was dissolved in
1984.
In 1990, the new Organic Law of the

Bank, which highlighted the central bank aspect of the
BCV, with the latter having as its main function the
management of monetary and exchange rate policies and
as a State banker, together with the function of commercial
bank
and
development. The years 1991 to 1993 were
were dedicated to preparing conditions for the

decommissioning of the commercial and development aspects,
which would happen in
September 1993.
Since then, Banco de Cabo Verde's activity has
aimed at training and strengthening its functions as a central bank. Following the reforms
initiated in 1991, there was a progressive liberalization of the financial sector, with
repercussions on the way in which monetary and exchange rate policies were managed.
In an attempt to concentrate supervisory action over the entire financial system in a

single institution, Banco de Cabo Verde was assigned the mission of supervising and
controlling institutions that operate in the monetary and financial markets, that is, credit
and parabank institutions, insurance institutions, as well as those in the capital market.
Mission and Objectives
The Bank of Cape Verde's main objective is to maintain price stability, an important
aspect of monetary policy, with fundamental implications for the economic situation and
the level of employment. Despite the primary objective of price stability, the Central Bank
is also responsible for promoting liquidity, solvency and the proper functioning of a
financial system
3
based on market stability.
Banco de Cabo Verde also performs other functions and must:
Define and execute monetary policy autonomously and

Cape Verde's exchange rate;
Hold and manage the country's official foreign exchange reserves and act as
an intermediary in the State's international monetary relations;
Advise the Government on matters of a financial nature.
Within the scope of implementing monetary and exchange rate policy, the Bank is
entrusted with the following functions:
Regulate the functioning of the monetary, financial and foreign exchange

markets, adopting generic measures or intervening, whenever necessary,
to ensure compliance with economic policy objectives, in particular with
regard to the evolution of interest and exchange rates;
Exercise supervision of credit and parabank institutions, namely, establishing

guidelines to ensure credit risk centralization services;
Supervise insurance, reinsurance, insurance

mediation, pension fund and related or
complementary activities.
It also falls within the scope of the Bank's tasks
and attributions to directly ensure, or regulate,
monitor
and promote the proper functioning of payment

systems.
clearing and payments, as well as centralizing and

preparing statistics
monetary, financial, exchange rate and balance
of payments.
As the country's exchange rate authority, the

3
Banco de Cabo Verde supervises and monitors external payments and enters
into compensation and payment agreements with similar entities domiciled
abroad.
Banknotes and Coins
The Bank of Cape Verde has a monopoly on the issuance

of banknotes and coins, including commemorative ones.
Banknotes in circulation have the following denominations:
200, 500, 1000, 2000 and 5000 escudos. The
denomination
of the coins varies between 1, 5, 10, 20, 50, 100 and 200
escudos.
Each note issued evokes a figure, a personality, an

object, a being. Banknotes issued between 1977
and
1989 have the particularity of having the front illustrated with
the figure of Amílcar Cabral, with the back varying between
images of places, people, folkloric and cultural activities, among others. From the
emissions
carried out in 1992, the front and back of the notes varied between
buildings, personalities, plants, insects, ships and ordinary citizens, all motifs that portray
the country and the nature of the people of the islands.
3
Central Banks and Regional Integration

Some countries, because they belong to an economic region, choose to give up their
currency and adopt a common currency, remaining under the supervision of a
Common Central Bank. Examples include the countries of the European Union, which
adopted the Euro, the countries of Central Africa and West Africa, which adopted the
CFA franc.
The European Central Bank
In Europe, 12 of the European Union member countries have decided, since 19993
, give up their national currency and adopt the Euro. This option also resulted in
the delegation of monetary policy, from now on to the European System of Central
Banks (ESCB)4 . The ESCB is made up of the European Central Bank (ECB) and the
National Central Banks (NCBs) of all European Union (EU) Member States.
Created on June 1, 1998, the ECB is one of the youngest central banks in the world. The
ESCB is the guardian of price stability in the euro area. In accordance with article 2 of
the Protocol relating to the Statutes
ESCB and , “the primary objective of the ESBC is to maintain

ECB5
3 On January 1, 1999, the number of Participating States was 11, having increased to 12 on
January 1, 2001 with Greece's entry into the Third Phase of EMU (Economic and Monetary
Union)
4 Given that there are still 13 Member States that have not adopted the Euro, it was decided to
call the system formed by the group of 12 NCBs plus the ECB the Eurosystem.
5 The legal basis of the ECB and the ESCB is the Treaty establishing the European
Community. Its Statutes are attached in the form of a protocol.
3
price stability” and, without prejudice to this objective, “the ESCB will
support general economic policies in the Community, with a view to
contributing to the achievement of the
Community's objectives, as defined in
Article 2 of the Treaty”. Article 2 of the
Treaty refers to the Community's
objectives as “a high level of employment
(…), a
sustainable growth and not
inflationary, a high degree of

competitiveness and convergence of
economies’ behaviors”.
Article 3 of the Protocol stipulates the

main tasks of the Eurosystem:
Define and execute policy

euro area currency;
Carry out foreign exchange operations;
Hold and manage the official foreign exchange reserves of Member States;
Promote the smooth functioning of payment systems.
Other of its duties are:
Authorize the issuance of banknotes in the euro area;
Present opinions on draft community acts and national bills;
Collect the necessary statistical information from national

authorities or directly from economic agents, including financial
institutions;
Contribute to the good conduct of the policies developed by the

competent authorities, with regard to the prudential supervision
of credit institutions and the stability of the
financial system.

3
The Central Bank of West African States (BCEAO)
BCEAO is the Central Bank of the eight member countries of the West
African Economic and Monetary Union (UEMOA): Benin, Burkina-Faso,
Côte d'Ivoire, Guinea-Bissau, Mali, Niger, Senegal and Togo. The institution
was created in 1962, under the West African Monetary Union Treaty. It is
responsible for managing the Union's reserves and foreign exchange, for
managing the monetary policy of the Member States, for administering the
State Treasury accounts and for defining the law applicable to banks and
Union financial establishments.
It also has the privilege of monopoly on
monetary issuance and, like other Central
Banks, its main mission is to ensure price
stability and promote economic growth
in the countries of the union. Its
responsibilities also include the
supervision of financial institutions,
advisory
to UEMOA member states in

economic-financial matter, in order to contribute to the design and
implementation of efficient economic policies and induce balanced
and
durable human development, as well as the strengthening of the common
currency, the African Financial Community (CFA) franc.
The Bank of Central African States (BEAC)
The Bank of Central African States (BEAC) is an institution created in 1972,

within the Economic Community of Central African States, which brings
together Cameroon, the Central African Republic, Chad, the Republic of
Congo, Equatorial Guinea and Gabon. BEAC is responsible for implementing
the common monetary policy, setting interest rates and managing and
controlling external reserves and debt. Cumulatively, BEAC provides support
for the implementation of policies developed by Member States.
3
The Independence Requirement

The issue of Central Banks is associated with an issue of extreme
importance, which is the need for independence of monetary authorities.
After the 1980s, the number of countries that granted independence to
their central banks increased, mainly as a result of their good
performance in combating inflation. Independent central banks were
found to be more effective than those subject to political control by the
authorities. The option for independence from the monetary authority
came to be seen as crucial to combat the tendency to adopt expansionist
economic policies, particularly in pre-election times, with the aim of
achieving short-term gains. The fact that a Bank is independent frees it
from political pressure, which makes it possible to create conditions to
more easily take measures to overcome inflationary trends. There are
several characteristics that identify the independence of central banks:
The appointment, dismissal and term of office of the Governor

and the Board of Directors are not dependent on political cycles
and regimes;
The State or any Institution cannot interfere in the Bank's

decisions, which has the prerogative to define the direction of
monetary policy and choose its instruments;
Freedom in defining objectives;
Limiting the granting of loans to the public sector.
Consider the example of the Eurosystem. This “enjoys complete

independence in carrying out its functions: neither the ECB, nor the
Eurosystem NCBs, nor any of the members of their decision-making
bodies should seek or receive instructions from any other body. (…) the
Eurosystem cannot grant any loans to community bodies or national
government entities (…).
Members of the ECB's decision-making bodies have long-term mandates
and can only be dismissed if they have committed misconduct

3
serious or if they are unable to properly perform their duties.

The ECB has its own budget (…)”6 .
The central banks of Austria, Germany and Switzerland reflect a greater

degree of independence, while those of Morocco and Poland are the least
independent. There are, however, some examples of independent central
banks, which were unable to combat high inflation rates in their countries,
and there is also the opposite, that is, central banks with a low level of
independence and successful in combating inflation. In the first group, we
can point out the cases of Argentina, Nicaragua and Peru, which, despite
being classified as countries whose central bank has above-average
independence, continue to record the highest inflation rates; In the second
group, there are Belgium, Japan, Morocco and Qatar which, despite being
among the countries whose central bank has a low degree of independence,
manage to have very low inflation rates.
As has been demonstrated, the activity of a central

bank is vital to a country's economy.
Together with other banks and the Government, the
central bank contributes to the construction of a
healthy and stable economy, positively influencing the
lives of all the country's inhabitants.
6 European Central Bank (2005), “Why is price stability important?”

3
Central Banks of the World

A
South Africa South African Reserve Bank
West Africa
Benin
Burkina Faso
Costa do
Marfim Guinea Central Bank of
Bissau Mali West African States
Niger
Senegal
Togo
Albania Bank of Albania
Germany Deutsche Bundesbank
Angola National Bank of Angola
Netherlands Antilles Bank of the Netherlands
Saudi Arabia
Antilles Saudi Arabian
Argentina
Monetary Agency
Armenia
Central Bank of the Republic of Argentina
Aruba
Central Bank of Armenia
Australia
Central Bank of Aruba
Austria
Reserve Bank of
Australia Central Bank of
B Austria
Bahrain
Barbados
Belgium
Bahrain Monetary Agency
Bermuda
Central Bank of Barbados
Bolivia
National Bank of Belgium
Bosnia Herzegovina
Bermuda Monetary Authority
Botswana
Central Bank of Bolivia
Brazil
Central Bank of Bosnia Herzegovina
Bulgaria
Bank of Botswana
Brazilian central bank
National Bank of
Bulgaria
3
W
Cape Green
Bank of Cape Verde
Canada
Bank of Canada
Eastern Caribbean
Anguilla
Antiqua and Barbuda
Dominica
Grenade
Montserrat
Central Bank of the Eastern Caribbean
Saint Kitts and Nevis
Saint Lucia
San Vincent and the
Grenadines
Czech Republic Czech National Bank
China People's Bank of China

Chile Central Bank of Chile
Cyprus Central Bank of Cyprus

Colombia Bank of the Republic of Colombia
Democratic Republic of Congo Central Bank of Congo

Korea Bank of Korea
Costa Rica Central Bank of Costa Rica
Croatia Croatian National Bank
D
Denmark
National Bank of Denmark
Dominican Republic
Central Bank of the Dominican Republic
AND
Egypt Central Bank of Egypt

El Salvador Central Reserve Bank of El Salvador
Ecuador Central Bank of Ecuador

Republic of Slovakia National Bank of Slovakia
Republic of Slovenia Bank of Slovenia
Spain Bank of Spain

U.S Federal Reserve
Estonia Bank of Estonia

3
F
Philippines
Central Bank of the
Finland
Philippines Bank of Finland
France
Bank of France
G
Ghana
Bank of Ghana
Georgia National Bank of Georgia

Greece Bank of Greece
Guatemala Bank of Guatemala
Guyana Bank of Guyana
H
Haiti Bank of the Republic of Haiti
Netherlands Bank of the Netherlands
Honduras Central Bank of Honduras
Hong Kong Hong Kong Monetary Authority
Hungary Central Bank of Hungary
I
Yemen Central Bank of Yemen
India Reserve Bank of India
Indonesia Central Bank of the Republic of Indonesia
England Bank of England

Ireland Central Bank of Ireland
Iceland Central Bank of
Israel Iceland Bank of Israel
Italy Bank of Italy
J
Jamaica Bank of Jamaica
Japan Bank of Japan

Jordan Central Bank of Jordan
K
Kazakhstan National Bank of Kazakhstan
Kuwait Central Bank of Kuwait
3
L
Lesotho
Central Bank of Lesotho
Latvia
Bank of Latvia
Lebanon
Bank of Lebanon
Lithuania
Bank of Lithuania
Luxembourg
Central Bank of Luxembourg
M
Macao
Macau Monetary and Exchange Authority
Macedonia
National Bank of the Republic of Macedonia
Malaysia
Central Bank of
Malawi
Malaysia Reserve Bank
Malta
of Malawi Central Bank
Mauritius
of Malta Bank of
Mexico
Mauritius
Mozambique Bank of Mexico
Moldavia
Bank of Mozambique
Mongolia National Bank of Moldova
Bank of Mongolia
N
Namibia
Nepal Bank of Namibia

Nicaragua
Central Bank of Nepal
Norway
Central Bank of Nicaragua
New Zealand
Bank of Norway
Reserve Bank of New Zealand
O
Oman
Central Bank of Oman
P
Palestine
Pakistan Palestinian Monetary Authority

Paraguay
State Bank of Pakistan
Peru
Central Bank of Paraguay
Poland
Central Reserve Bank of Peru
Portugal Central Bank of Poland
Portugal's bank
3
Q
Qatar
Central Bank of Qatar
Kenya
Central Bank of Kenya
R
UK
Bank of England
Romania
National Bank of Romania
Russia
Central Bank of Russia
s
San Marino San Marino Credit Institute
Sao Tome and Principe Central Bank of São Tomé and Príncipe
Singapore Monetary Authority of Singapore

Syria Central Bank of Syria
Sri Lanka Central Bank of Sri Lanka
Sudan Bank of Sudan
Swaziland
Central Bank of Swaziland
Sweden
Sveriges Riksbank
Switzerland Swiss National Bank
T
Thailand Bank of Thailand
Taiwan Central Bank of China
Tanzania Bank of Tanzania
Trinidad and Tobago Central Bank of Trinidad and Tobago

Tunisia Central Bank of Tunisia
Türkiye
Central Bank of the Republic of Türkiye
U
Ukraine National Bank of Ukraine
Uganda Bank of Uganda
European Union European central bank
Uruguay Central Bank of Uruguay
V
Venezuela Central Bank of Venezuela
3
Z
Zambia
Bank of Zambia
Zimbabwe
Reserve Bank of Zimbabwe

3
Bibliography
SAMUELSON, PA, NORDHAUS, WD (1999), “Economy”, McGraw Hill
SHAPIRO, E. (1994), “Macroeconomic Analysis”, Atlas SA
VASCONCELOS, MAS (2000), “Micro and Macro Economy”, Atlas SA
MANKIW, NG (1999), “Introduction to Economics”, Campus Lda.
BCEAO (2006), “Economic Perspectives of UEMOA States in 2006”, Annual Bulletin
European Central Bank (2005), “Why is price stability important?”
QUINTYN, M., TAYLOR, MW (2004), “Should Financial Sector Regulators be Independent?”, International
Monetary Fund
CORAZZA, G., (1995), “Central Banks and their public-private ambivalence”

Central Bank of Brazil, “Central Bank Booklet”
Central Bank of Brazil (2004), “What is a Central Bank”
European Central Bank (1992), “The European Central Bank”
BCEAO, http:// fr.wikipedia.org
BEAC, http:// fr.wikipedia.org
Central Bank websites, http:// www.bis.org/ cbank.html
Independence Before Conservatism: Transparency, Politics, and Central Bank
Design, http:// www.venderbilt.edu/ econ

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CENTRAL BANK CENTRAL BANK CENTRAL BANK

Bank of Cape Verde

Av. Amilcar Cabral - CP 101, Praia - Cape Verde

The Origin of Central Banks....................9

The Functions of Central Banks.............10

Bank of Cape Verde...................................17

Central Banks and

The Requirement of Independence.................25

Central Banks of the World..................................27

“There have been three great inventions

trip inside the central banks, with the main objective of

important way of visualizing the importance of these Institutions

have for our daily lives. Throughout it there will be a brief

historical retrospective, also addressing topics such as

emergence of central banks.

Whenever an economy depends on a currency system

legal tender, as is the case in Cape Verde, it is necessary

the existence of a body responsible for regulating the

system. In Cape Verde, this body is the Banco de Cabo Verde.

If you look at a escudo note, you will see that it has

the name Banco de Cabo Verde is registered. The Bank of

Cape Verde is an example of a central bank, that is, a

institution responsible for supervising the banking system and

regulator of the quantity of money in the economy. Beyond the Bank

the United States Federal Reserve, the Bank of England,

the Bank of Japan and the German Bundesbank.

thus promoting an increase in

Central Banks must also encourage free movement

of information, providing citizens with knowledge

necessary to analyze and better understand the markets

financial. Based on the knowledge acquired, the

economic agents will be able to demand their rights and

to fulfill their duties. In this way, citizens will be able to

have greater participation in the country's economy and exercise

What is a Central Bank 7

The Origin of Central Banks

As time passes, the

delivered by bankers have become

The Bank of England was one

France, in 1800, Germany, in 1875, Japan,

The Functions of Central Banks

Government banker: he is the one who keeps the government's

10 What is a Central Bank

Currency issuing authority, with issuance monopoly: it is the central

Executor of monetary and exchange rate policy: it is the central bank

Bank of Banks, or lender of last resort: the central bank provides

What is a Central Bank 11

Monetary Control Instruments

Open Market Operations or Open Market

central bank that pursues expansionist objectives,

increase in the money supply will have a

significant effect on consumption and loans,

12 What is a Central Bank

The monetary authorities

require commercial banks to maintain a

What is a Central Bank 13

Other Central Bank Interventions

In addition to the currency held by nationals, the supply of currency is

The role of the exchange system

The exchange rate system plays an important role in a country's financial

1 Currency held by non-residents