What are the operations of the Central Bank

The central bank performs important functions through certain operations. Their volume and structure depend on the objectives of the entire credit and monetary policy, they are reflected in its balance sheet. Important terms

To understand what operations of the Central Bank are, it makes sense to deal with the basic concepts:

1. The balance of the Central Bank includes two parts: assets and liabilities. The second one reflects commitments, sources of resource formation. And in the first part there are requirements that characterize their use, composition and location.
2. The main source of resources of such a bank in many countries is the issue of banknotes. Its necessity is caused by the expanded reproduction, and also by the realization of a new product requiring additional means of payment.

Main positions in the activity

From the above, it follows that the operations of the Central Bank can be conditionally classified as active and passive. The first at the initial position is an article that reflects the stock of gold (monetary) country. In a number of states, its share is large, others are smaller. The next position of the assets is "Foreign Exchange Reserves". They are placed in the Central Bank. Their replenishment occurs through various actions related to management.

The Central Bank's operations related to the refinancing of commercial establishments are placed in such positions as "Bills of exchange" and "Borrowings secured". In those countries in which the market of valuable government securities is developed, investments in it are of great importance. The interest received is an important source of income. Other assets include direct loans to state institutions and the treasury.

Passive operations of the Central Bank are distinguished by their peculiarity, which is that the source of their formation is the issue of banknotes, and not their capital and various attracted deposits.

The central bank accumulates deposits of the state and commercial banks, carries out storage of cash cash. At the same time, he does not pay interest on their deposits, but conducts operations for them free of charge on the territory of the country free of charge.

Liabilities form such articles:

1. CC (authorized capital).
2. Paper and money issue.
3. Funds (reserve).
4. Credits.
5. Deposits.
6. Other liabilities.

How are things in Russia? The operations of the Central Bank of the Russian Federation are as follows:

1. Granting loans for a period of one year against bail.
2. Realization and purchase of bonds, certificates of deposit.
3. Purchase and sale of currency, payment documents, precious metals, valuable government securities, other assets.
4. Issuance of guarantees with guarantees.
5. Operations with instruments (financial) for risk management.
6. Opening of accounts in foreign and Russian organizations on the territory of the country.
7. Issue of bills and checks in different currencies.
8. Other operations used in international banking practice.

Having studied the functions and operations of the Central Banks, it is easy to understand that they play the role of a regulating and coordinating body in economic systems.