central bank, reserve bank, or monetary authority is an institution that manages a state's

currency, money supply, and interest rates. Central banks also usually oversee the commercial
banking system of their respective countries. In contrast to a commercial bank, a central bank
possesses a monopoly on increasing the amount of money in the state, and usually also prints the
national currency,[1] which usually serves as the state's legal tender.[2][3] Examples include the
European Central Bank (ECB) and the Federal Reserve of the United States.[4]
The primary function of a central bank is to manage the nation's money supply (monetary
policy), through active duties such as managing interest rates, setting the reserve requirement,
and acting as a lender of last resort to the banking sector during times of bank insolvency or
financial crisis. Central banks usually also have supervisory powers, intended to prevent bank
runs and to reduce the risk that commercial banks and other financial institutions engage in
reckless or fraudulent behavior. Central banks in most developed nations are institutionally
designed to be independent from political interference.[5][6] Still, limited control by the executive
and legislative bodies usually exists.[7][8]
The chief executive of a central bank is normally known as the Governor, President or Chairman.

Monetary policy is the process by which the monetary authority of a country controls the supply
of money, often targeting a rate of interest for the purpose of promoting economic growth and
stability.[1][2] The official goals usually include relatively stable prices and low unemployment.
Monetary economics provides insight into how to craft optimal monetary policy.
Bank reserves or central bank reserves are banks' holdings of deposits in accounts
with their central bank (for instance the European Central Bank or the Federal
Reserve, in the latter case including federal funds), plus currency that is physically
held in the bank's vault ("vault cash").[1] The some central banks set minimum
reserve requirements, which require banks to hold deposits at the central bank
equivalent to a specified percentage of their liabilities such as customer deposits.
Even when there are no reserve requirements, banks often opt to hold some
reservescalled desired reservesagainst unexpected events such as unusually
large net withdrawals by customers or bank runs.
Lender of last resort: The goal is to prevent financial panics and bank runs
spreading from one bank to the next due to a lack of liquidity.