Bank is an important financail institution of financial market.Maybe many people may wonder that how it come into being? In fact there are two kinds of bank.They are central bank,commercial bank.Now let's dicuss it separately.
The central bank(CCB) evolved from the commercial bank.As I know ,the england CCB is an good example.Let's trace back to the time there are no CCB.In that time,there are no CCb,so there many commercail banks and they are indepent.In early time,bank run the bussiness of issuing financial notes or so called financial papers.In such a situation,the bank notes are hard to settle up and even the bank would be apt to issuing more bills than its capacity.So the financial market of course sometimes run into chaos and this is why The CCB shoule exist.In a word,the CCB is a bank of banks.why to say so? We can see that the main function or bussiness of the CCB.
Now first let's look into the debt bussiness.
1st:asset bussiness: the CCB it is a bank so it must have enough capital to support its existing.Its main capital comes from central government,local government,or other its owner(stock holders).
2nd:currency-issuing : This is most important fuction of CCB and it reflects its priority over other commercial bank.
3rd:depoist bussiness:its depoistor is the government and the commercial banks.
Then let's go to the asset bussiness.
1st:load bussiness:commercial bank can got loans from CCB.
2nd:Rediscout:discounting the bank bills for commercial banks
3rd:securitis and foreign exchange investment:
The last the CCB gets some off-balance bussiness.Like the clearing of bills of commercial banks and so on.
Form all above,we can see that the CCB is a bank of banks.It can issuing currency and therefore decide the interest rate which is an impootant factor of the Commercial bank cost.So CCB is supperviser of the national banks.And in this way the CCB keep its position in the financial market.
