Central Banks
Who are the central banks?

Is the institution responsible for monitoring and directing the banking system in the state

Functions of central banks
* Monetary policy management

* Issuing and organizing the business in the state

* Doing banking for the government sector

* The last resort for all banks and do the acts of compensation and control them

Control and control the volume of credit by implementing monetary policy

* Manage the international reserves of foreign exchange and exchange rate

* Preserve the cash reserve of banks in the banking system

* Redistribution of securities and commercial bank financing

* Contribute to the economic planning work

* Provides economic and financial advice to the state-of-the-art banking system in the planning business

The most important central banks

Federal Reserve (FED)

European Central Bank (ECB)

Bank of England (BOE)

The Bank of Japan (BOJ)

Relationship of the Central Bank to the Forex market

The central bank affects the Forex market significantly and is considered a real market makers and significantly affects the movements of currency in the Forex market and the most important decisions to move the currency in the Forex market
interest rates

Interest rate has the greatest impact on currency movements in the Forex market and therefore should be followed closely and understanding the central bank's interest rate interest as raising the interest rate in general is positive for the currency and vice versa

Monetary policy

To be determined by the Central Bank in order to control the amount of money offered in order to provide funds to the State

They are divided into two types

Expansionist policy

The central bank applies the expansionary policy when the economic recession occurs in the country

Deflationary policy

The central bank is in the process of increasing economic growth

Quantitative facilitation

QE is a tool of monetary policy that is used by central banks after lowering interest rates. The word "quantification" indicates money supply and quantitative easing means increasing the money offered

It means pumping large liquidity into the market and in this case leads to devaluation


Is a rise in the overall level of prices of goods and services is considered the key to the process of increasing interest rates

In the case of increased inflation leads to an increase in the interest rate and thus the appreciation of the currency


Inflation is below zero

In this case, central banks cut interest rates when deflation occurs and as a result the currency depreciates
Finally, it should be emphasized that the follow-up of the central banks and the news and reports issued by them is very important in reading the market and helps you to decide in determining the strength or weakness of the currency and the central bank's goal of currency direction