Central Banks

Question 1

Role of Central Banks

Answer 1

Banker to Banks and government

1) Lender of Last Resort
2) Control money supply
3) Economic Stability
4) Banking Supervision

Question 2

x3 Central Banks

Answer 2

BOE
European Central Bank
Federal Reserve

Question 3

One rule that is not role of central bank

Answer 3

Deposit Protection

Question 4

Roles of BOE

Answer 4

Lender of Last Resort

Control money supply (MPC)

• Set interest rates
• Quantitative easing

Economic Stability

Banking Supervision

Question 5

European Central Bank

Answer 5

Lender of Last Resort

Control money supply

• Set interest rates
• Quantitative easing

Economic Stability

Banking Supervision (SSM)

Question 6

Federal Reserve

Answer 6

Lender of Last Resort

Control money supply (FOMC)

• Set interest rates
• Quantitative easing

Economic Stability

Banking Supervision

Question 7

Quantitative easing

Answer 7

Buying bonds

Pumps money back into economy

Question 8

SSM

Answer 8

Single Supervisory Mechanism

EU competent authorities e.g. FCA

Question 9

FOMC

Answer 9

Federal Open Markets Committee

Part of Federal reserve , meet every 6 weeks examine latest
economic data
Gauge health of economy and whether interest rates should be altered

Question 10

Bank of England Monetary Policy Committee

Answer 10

Meets monthly consider monetary stability

Sets interest rates (meet 2% target inflation rate ) based on CPI

+/ - 1% leeway

Question 11

UK Base Rate

Answer 11

Set by MPC

Question 12

ECB inflation defined by CPI

Answer 12

Close to but below 2% in medium term

Question 13

Western Governments control inflation at

Answer 13

2-3 %

Question 14

Gilts market regulated by

Answer 14

Treasury