Concerned about the Security of their Investments and Bank Deposits

Content
TOC \h \u \z Background of Central Bank of Brazil PAGEREF _Toc69634338 \h 4Issue Currency PAGEREF _Toc69634339 \h 5Acts As Banker to Banks PAGEREF _Toc69634340 \h 7Acts As Banker to the Government PAGEREF _Toc69634341 \h 7Acts As the Lender of Last Resort PAGEREF _Toc69634342 \h 8Implements Monetary Policy PAGEREF _Toc69634343 \h 8Regulates the Financial System PAGEREF _Toc69634344 \h 12Conclusion PAGEREF _Toc69634345 \h 14References PAGEREF _Toc69634346 \h 16
Appraise the Effectiveness of the Central Bank of Brazil, as Compared to the Federal Reserve in the US, in Performing the Functions of Central Bank in Brazil.
Introduction
A central bank, also known as a monetary authority or a reserve bank, is a national institution that is charged with the responsibility of managing a country's currency and its monetary policy in addition to overseeing the commercial banking system in the country or a formal monetary union that brings together different states. Unlike commercial banks, the central bank has a monopoly of authority when increasing a country's monetary base. In many other countries, the central bank also plays supervisory and regulatory roles to maintain stability within the economy (Brezina, 2012). As such, the central banks can prevent bank runs and discourage fraudulent financial behavior and recklessness among other member banks (Herendeen, 2008). In many developed nations, the central banks are independent institutions that operate free of political interference. However, even with such arrangements, the central banks are still subject to control, albeit limited, by the executive and the legislature.
Since each country has its unique economic systems, needs, and legal frameworks that define their central banks' authority and roles, certain functions seem to cut across all the central banks globally. For example, a central bank's primary roles include monetary policy, reserve management, issuing coins and notes, maintaining financial stability, managing payment systems, and banking supervision, amongst other functions (Brezina, 2012). In terms of managing the monetary policy, the central bank's role is to set the official interest rates within an economy. In addition, the central bank also controls the money supply within an economy. The other role of a central bank is to maintain financial stability. In this regard, the central bank serves as the government's bank and the banker's bank or the lender of last resort (Herendeen, 2008). The central bank also acts as the national reserve manager. It is the institution charged with managing the foreign exchange of a country, its gold reserves, and government bonds (Brezina, 2012). The central bank also supervises and regulates the entire banking industry.
Furthermore, the institution also manages and supervises inter-bank clearance systems and payment systems in a country. The other important role of the central bank is to issue notes and coins used for financial transactions in an economy. Other central bank functions include conducting economic research, collecting statistics, advising the government on financial matters, and supervising deposit guarantee schemes. The primary objective of central banks is to ensure the stability of prices within an econo...