Central bank

“ And so, if we had a central bank, with the power of practically fixing the price of every commodity in the United States, of aggregating to itself, or those who exercised its powers, just such proportion of the production of wealth of the Union as they saw fit ; it would, in a little while, tend to a selfish use that could be neither effective nor beneficial ; and, like all other forms of inordinate and unequal power, it must become destructive of any republican form of government. ”

“ In this "Plan" he maintained that the general government ought to agree to pay the interest of the public debt in coin, and that the notes of the national bank ought to be payable on demand in six per cent. stock at par, or in specie at the option of the institution. The national bank ought to have no branches, but to be the bank of the banks. The notes of all the banks in any one State should be made convertible on demand in the notes of one designated central bank, and the notes of these chief State banks ought to be redeemable in notes of the national bank. ”

“ The central bank not only carries a reserve which is far in excess of immediate requirements in ordinary times, but also uses this reserve boldly in times of stress, presenting in both these respects a marked contrast to the policy of American banks. As a result, European business men need not fear either a refusal to lend or a restriction of payments by the banks on which they depend. And panic has small chance to develop where the depositor can get his money at need and the solvent business man can borrow. ”

“ Visibility would defeat its object. The Money Masters had read history and knew that the American people stood four square against a Central Bank. If their monster of pillage were called a Central Bank they knew it would die in the legislative womb. ”

“ The amount of each national central bank's monetary income shall be equal to its annual income derived from its assets held against notes in circulation and deposit liabilities to credit institutions. These assets shall be earmarked by national central banks in accordance with guidelines to be established by the Governing Council. ”

“ The second attempt to engraft a Central Bank on American industry was the Second Bank of the United States. It was chartered on April 10, 1816, and was a stormy petrel of finance. About it waged a running battle. It was from birth to death the center of a conflict. Against its domination American industry rebelled. Real producers of real wealth constantly fought this parasite of finance. ”

“ Warburg is not at all shocked by the idea that the Federal Reserve System is really a new kind of private banking control, because in his European experience he saw that all the central banks were private affairs. ”

“ The absence of a State Bank makes it difficult for the Government to use its cash balances or any other part of its liquid funds to the best advantage,—since it cannot prudently place the whole of its free resources in the hands of a private institution.
(v.) The absence of a central banking authority leads to a general lack of direction in the banking policy of the country: it is no one’s business to look at the matter as a whole, to know the position of the [237] market’s component units, or to enforce prudence when it is needed. ”

“ In such countries a rise in the bank rate cannot be relied on to produce the desired effect with due rapidity. A direct policy on the part of the Central Bank, therefore, must be employed. If the Money Market is not a lender in the international market, the Bank itself must be at pains to become to some extent one. ”

“ An institution might have been established with large capital, and a monopoly of the right of note issue, authorized to act as government fiscal agent, and to deal with the general public. Such an institution would presumably in the course of time have become a central bank, the main reliance of other banks in emergencies. In order to avoid competition with existing banks, the act provides that the receipt of deposits by the Federal Reserve Banks, and their normal lending operations shall be confined to those banks which subscribe to the capital and maintain balances with them. ”

“ The reason is that a central bank which is governed in the capital and descends on a country district, has much fewer modes of lending money safely than a bank of which the partners belong to that district, and know the men and things in it. A note issue is mainly begun by loans; there are then no deposits to be paid. But the mass of loans in a rural district are of small amount; the bills to be discounted are trifling; the persons borrowing are of small means and only local repute; the value of any property they wish to pledge depends on local changes and local circumstances. ”

“ A commission will be appointed to study our banking laws and to recommend, if it is found desirable, a central bank to become the fiscal agency of the Government in the control of credit, to act as the clearing house for inter-bank transactions, to manage bank reserves and to afford more flexibility in our currency system. ”

“ Within the district for which any particular reserve bank is the central bank, this particular force will be practically inoperative; for the power to issue notes on the basis of common assets is not given to any but the reserve banks, and the profitableness of the power to issue the old type of note has always proved too low to induce banks generally to take much trouble to get their own notes into circulation. ”

“ The great need, he said, in order to give control and steadiness to financial affairs and the currency system, is a central bank and branches modeled after the United States Bank founded by Hamilton in 1791, and after government banks of Europe. On November 23, 1909, he wrote:
"Our people, believing they can regulate by their votes, the value of money, and calling notes issued by authority of the government, money, will not permit any rational currency or rational banking system to be established in the United States. ”

“ Today, there is hardly any commercial, agricultural, or industrial activity of national economic importance which has not been assisted by one or all of these corporations,―the Central Bank indirectly, of course, through the support it has given to the loan activities of the two other institutions. ”

“ That crises still degenerate on occasion into panics in America, but not in England, France, or Germany, arises primarily from differences in banking organization and practice. In each of the three European countries, the banking system as a whole is so organized by the prevalence of branch banking and the existence of a central bank that reserves which bear a small proportion to the aggregate demand liabilities of all the offices can be applied when and where they are most needed. ”

“ Article 49 - Deferred payment of capital, reserves and provisions of the ECB 1. The central bank of a Member State whose derogation has been abrogated shall pay up its subscribed share of the capital of the ECB to the same extent as the central banks of other Member States without a derogation, and shall transfer to the ECB foreign reserve assets in accordance with Article 30.1. ”

“ If new sources of revenue are found, then the Central Bank within our covenants with IMF can ease the restrictions it now places on both public and private borrowing, and will be in a much better position to improve the structure of our external debt. ”

“ Hence central organisations act as money equalisers between the different societies. In some districts money is superabundant, in others it is deficient. The central bank acts as a channel through which the abundance of one district can be drawn to supply the scarcity of another, the operations being conducted by means of current accounts with both parties. In Germany as a whole the societies of small agriculturists of the Southwest have always an abundance of money, which is one [Pg 545] reason why they dispense so much of their funds in the purchase of property transfers. ”

“ Observe the phrases:
(a) “without giving the government any part in the management or control.” (b) “these central banks, while legally private corporations . . . . are permitted to issue the notes of the nation.” (c) “they are custodians of practically the entire metallic reserves of the nation and the keepers of the government funds.” (d) “in questions of national policy, the government must rely on the willing and loyal co-operation of these central organs.” It is not now a question whether these things are right or wrong ”

“ A clear, succinct statement of the banking conditions which have revived this question, with explanations of what it involves, appears in the following, borrowed from a monthly financial letter sent out in November by the National City Bank of Chicago: "The creation of a Central Bank of Issue as a cure for the defects of our financial system is of such importance that a brief review of the proposition may be of interest to our clients: "The business of banking is probably as sound in this country as in any other. Our individual banks are, as a rule, prudently, honestly and capably managed. ”

“ Central Bank more likely to unify the currencies than to make them convertible.Unless the Central Bank can obtain more actual hard money than it now appears to possess, it can hardly hope to unify and stabilise all Manchurian currencies on a convertible silver-dollar basis. Even if it were to succeed in creating a currency which was uniform though not convertible, it would possibly have accomplished something, but even a uniform currency the stability of which is not guaranteed by conversion falls short of the requirements of a sound monetary system. ”

“ With the operation of the Central Bank, we expect to maintain our domestic monetary stability, the inter­national value of the peso, the free convertibility of ­the peso into United States dollars and other freely con­vertible currencies, and the promotion of a rising level of production, employment and real income. ”

“ In line with its policy of restructuring our external debt, the banks will be asked to stretch the maturity periods of their unused credit. The Central Bank, for its part, will provide commercial banks with automatic forward exchange cover of their external exposure arising from the financing of imports through acceptances.
Trade Credits from Suppliers
Second, domestic importers will be given the inducements to finance their imports from trade credits available directly from their suppliers, whether the importers are independent companies or subsidiaries of foreign corporations. ”

“ Subject to Article 2, the ECB may require credit institutions established in Member States to hold minimum reserves on accounts with the ECB and national central banks in pursuance of monetary policy objectives. ”

“ The Federal Reserve system allows us to secure the main benefits of a great central bank without the political difficulties attendant upon the existence of such a bank. It does a great deal to make elastic our supply of money and credit. The Federal Reserve Board can mobilize the entire banking strength of the country in time of stress, so that the strength of one member bank is the strength of the whole system. ”

“ Foreign legislators have approximated more closely than ours what is needed in the regulation of bank investments. In the case of their central banks, many of them, notably those of France and Germany, have recognized the fundamental distinction between commercial and investment paper, and have required them to hold the former against their demand obligations, especially their notes. ”

“ The monetary competence of National Authority shall necessarily be exercised exclusively by the Venezuelan Central Bank. The fundamental objective of the Venezuelan Central Bank is to achieve price stability and preserve the internal and foreign exchange value of the monetary unit. ”

“ The expectation that the Government will bring some of its gold to the rescue in extreme circumstances, has always been said to exert an enervating influence on the banks themselves in the matter of the precautions they take for times of crisis. The ultimate solution probably lies in the establishment of a Central Bank for India which shall be the Government Bank and shall hold the banking and currency reserves at the same time. ”

“ I think the question the American people are asking as they read about what the Fed did during the financial crisis is whether the Fed has now become the central bank of the world without any debate on the floor of the Senate or the Congress and without the knowledge of the American people. ”

“ The primary responsibility and mandate of the Central Bank of Sudan shall be ensuring price stability, maintaining stable exchange rate, sound banking system and issuance of currency. The monetary policy shall rely primarily on market-based instruments instead of administrative allocation of credit. ”

“ Sometime we may become wise enough to have a great central bank, with branches all over the country, like the Bank of France, whose strength was so great that even the commune of Paris, in the ascendant in 1871, dared not touch it. ”

“ Intoxicated by this pecuniary nectar, the fortunate, those privy to the secret, try to raise more capital by hunting for financial instruments they can convert to cash in Western banks. A bank guarantee, a promissory note, a confirmed letter of credit, a note or a bond guaranteed by the Central Bank - all will do as deposited collateral against which a credit line is established and cash is drawn. ”