A central bank is a powerful financial authority typically owned or controlled by a government. Its primary responsibilities revolve around managing a country’s monetary policy and financial stability.

Central banks control the money supply and interest rates to influence economic factors like inflation, economic growth, and employment. They do this through various tools such as adjusting interest rates and conducting open market operations.

They are the sole authority responsible for issuing and regulating the nation’s physical currency. They design, print, and distribute money in the form of paper notes and coins.

Central banks often manage the government’s financial transactions, maintain government accounts, and support the issuance of government debt.

They provide services to commercial banks, including maintaining reserves, facilitating interbank transactions, and serving as a lender of last resort during financial crises.

Central banks monitor and maintain the stability of the financial system, stepping in to prevent or mitigate financial crises and ensure the overall health of the banking and financial industry.

In some countries, central banks manage the nation’s exchange rates, influencing the value of the currency in international markets, which can affect international trade and the domestic economy.

In summary, central banks are pivotal institutions in traditional financial systems, responsible for managing a nation’s money supply, monetary policy, and financial stability.