What is a Central Bank?

In this video we explore what a central bank is and its powers and functions.

A central bank has unique powers that differentiate it from other commercial banks. Some of these powers, which influence the public in an immediate and direct way, include the setting of interest rates, the issuance of currency and the management of the national payment system. No other bank in the country has such powers, which shows the special place of the central bank in the economy.

The South African Reserve Bank’s role has become entrenched in the domestic economy since its establishment in 1921. The central bank works closely with the government, but takes its decisions independently from the government. This independence ensures that decisions are taken in the best interest of the country as a whole and its entire people, rather than in support of the government. The South African Reserve Bank is also the banker of the central government, which contributes to the special relationship between the central bank and the government.

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