Analysis of State Bank of Pakistan

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The State Bank of Pakistan {SBP}

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Central BankingIntroductionA central bank is an apex institute of the country about the monetary point of view. A central bank is the term, which is for used to describe the authority that is responsible policies, which can affect a supply of money and credit in the country.

In general, the central bank is a financial institution that manages the governments finance, controls the availability of money and credit to ensure the low inflation, to boost up the high growth and stability to financial setup in the economy and control the commercial banks.

Prepared by:

Ali Raza / Ali Burhan / Hafiz Mehmeez

The State Bank of Pakistan {SBP}

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In the words of Lipsy, the central bank is defined as a bank

that acts as banker to commercial banking system and to the government as well. In the modern age, it is a government owned & operated institution that control the banking system and act as the sole money issuing authority.So by above explanation, we can say that central bank has a pivotal position in the banking system and have the ability to regulate & formulate the polices for schedule commercial banks in the country. And it is also responsible for the financial and economical stability of the country.

History About Central BanksIn beginning of the banking sector, the concept about central bank was not build. There were few of banks on local or zone levels with their own currency and polices. These financial institutes were the pioneer in the in of banking history of the system

mankind. In conference

1578,

Geneva,

Switzerland, the economists of developed countries took the decision against the

Prepared by:

Ali Raza / Ali Burhan / Hafiz Mehmeez

The State Bank of Pakistan {SBP}economies.

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metallic or commodity money and introduces the fiat money in their

The first bank whose considered, as first true central bank was Bank of Amsterdam established in 1609. This bank was created by Scottish businessman William Paterson to help the government of England in the situation of war. In 1661, the Riks Bank of Sweden was established as a joint stock bank to lend the government funds and to act as a clearing house for commerce. And in 1694, the Bank of England was chartered to raise the taxes and borrowing finance to war zone, which was created in the Austria, England, France & the Netherland. The Banque de France was created in 1800 by Napoleon Bonaparte, after the deep recession and hyperinflation in the French Revolutionary period. With the passage of time, the concept of Federal Reserve System in the central bank was emerged in the twentieth century. According to this concept, the currency is defined in terms of a fixed weight of gold. The central bank held a large gold reserve to ensure that their notes could be converted into gold any time. So, by this concept central bank is a primarily consolidate who have ability to issue various instruments which are commonly used as currency for the public and provide the financial stability to the economy.

Prepared by:

Ali Raza / Ali Burhan / Hafiz Mehmeez

The State Bank of Pakistan {SBP}

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After the World War I, there was complete and complicated confusion was created in the currency and exchange markets. This happened due to the issuance of large withdrawals from the banks as loans to pay for the war expenses. At that time, there was no any institution that supervises to the banks and also serves as the fiscal agent for the governments. To resolves these economic issues, the conference was held at Brussels in 1920. It was decided that there should be a central bank that control the money supply and credit creation in the economy. After the World War II, every country has their own central bank to control the monetary system in their economy.

Central Bank in the Modern EconomyThe governments can create central banks to perform a variety of functions. These functions are actually performed just to stable the economic condition in the country. The major functions of any central bank are may be as:

Government Bank towards the government

Apex Bank to control the banking sector Monetary Policymaker of the country Maintainer of Financial Stability Handler of Future Challenges

Prepared by:

Ali Raza / Ali Burhan / Hafiz Mehmeez

The State Bank of Pakistan {SBP}

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As the government banker towards the government means that the central bank can act as the repository organ for government receipts, collector agent for taxes, and the auctioneer for government debt. Its also provides loans to government for short terms with very small interest ratio. As the apex banker towards the banking sector in the economy means that the central bank can act as the repository organ also for the bank reserves, supervisor and regulator of banks, the facilitator of interbank services and a lender when banks need money. As the monetary policymaker of the country means that the central bank controls the amount of credit and money availability at the specific limits with the weapons of interest rates and exchange rate. The most important parameter of any policy is price stability in the value of money.

As the maintainer of the financial stability means that the stability of economy should be have the parameters of high employment and sustainable economic growth in the positive direction. Because enough not any economy has smooth business

Prepared by:

Ali Raza / Ali Burhan / Hafiz Mehmeez

The State Bank of Pakistan {SBP}are often associated with the business cycle.

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cycle without any up & down. The stock market and housing booms

As the handler of future challenges means that the central bank should have abilities to handle the future happening events in the efficient manner. The credibility is the major issues which is always unknown in the up coming days because the inflation & deflation factors are dependent on it. Another challenge is also present which may be happening in the future for the central bank financial innovations. And except from these objectives central bank may handle also various matters indirectly. For example, political instability, sharp variations in oil prices, taxation structure of the economy, development programs for the public, purchasing & selling ability in the economy an so many other affairs also.

Central Banks in the WorldPrepared by:

Ali Raza / Ali Burhan / Hafiz Mehmeez

The State Bank of Pakistan {SBP}their own economies in efficient manner as:

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Now, there are 165 central banks in the world which control

Sr. No:1) 2) 3) 4) 5) 6) 7) 8) 9) 10) 11) 12) 13) 14) 15) 16) 17) 18)

CountryAfghanistan Albania Algeria Argentina Armenia Aruba Australia Austria Azerbaijan Bahamas Bahrain Bangladesh Barbados Belarus Belgium Belize Benin Bermuda

Central BankBank of Afghanistan Bank of Albania Bank of Algeria Central Bank of Argentina Central Bank of Armenia Central Bank of Aruba Reserve Bank of Australia Austrian National Bank Central Bank of Azerbaijan Republic Central Bank of The Bahamas Central Bank of Bahrain Bangladesh Bank Central Bank of Barbados National Bank of the Republic of Belarus National Bank of Belgium Central Bank of Belize Central Bank of West African States Bermuda Monetary Authority

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Ali Raza / Ali Burhan / Hafiz Mehmeez

The State Bank of Pakistan {SBP}19) 20) 21) 22) 23) 24) 25) 26) 27) 28) 29) 30) 31) 32) 33) 34) 35) 36) 37) 38) 39) Bhutan Bolivia Bosnia Botswana Brazil Bulgaria Burkina Faso Burundi Cambodia Cameroon Canada Cayman Islands Central African Republic Chad Chile China Colombia Comoros Congo Costa Rica Cte d'Ivoire Royal Monetary Authority of Bhutan Central Bank of Bolivia Central Bank of Bosnia and Herzegovina Bank of Botswana Central Bank of Brazil Bulgarian National Bank Central Bank of West African States Bank of the Republic of Burundi National Bank of Cambodia Bank of Central African States Bank of Canada - Banque du Canada Cayman Islands Monetary Authority Bank of Central African States Bank of Central African States Central Bank of Chile The People's Bank of China Bank of the Republic Central Bank of Comoros Bank of Central African States Central Bank of Costa Rica Central Bank of West African States

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Prepared by:

Ali Raza / Ali Burhan / Hafiz Mehmeez

The State Bank of Pakistan {SBP}40) 41) 42) 43) 44) 45) 46) 47) 48) 49) 50) 51) 52) 53) 54) 55) 56) 57) 58) 59) 60) Croatia Cuba Cyprus Czech Republic Denmark Dominican Republic East Caribbean area Ecuador Egypt El Salvador Equatorial Guinea Estonia Ethiopia European Union Fiji Finland France Gabon The Gambia Georgia Germany Croatian National Bank Central Bank of Cuba Central Bank of Cyprus Czech National Bank National Bank of Denmark Central Bank of the Dominican Republic Eastern Caribbean Central Bank Central Bank of Ecuador Central Bank of Egypt Central Reserve Bank of El Salvador Bank of Central African States Bank of Estonia National Bank of Ethiopia European Central Bank Reserve Bank of Fiji Bank of Finland Bank of France Bank of Central African States Central Bank of The Gambia National Bank of Georgia Deutsche Bundes bank

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Prepared by:

Ali Raza / Ali Burhan / Hafiz Mehmeez

The State Bank of Pakistan {SBP}61) 62) 63) 64) 65) 66) 67) 68) 69) 70) 71) 72) 73) 74) 75) 76) 77) 78) 79) 80) 81) Ghana Greece Guatemala Guinea Bissau Guyana Haiti Honduras Hong Kong Hungary Iceland India Indonesia Iran Iraq Ireland Israel Italy Jamaica Japan Jordan Kazakhstan Bank of Ghana Bank of Greece Bank of Guatemala

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Central Bank of West African States Bank of Guya