Wednesday 29 August 2012

Central Bank and The Gold Standard



  The Republic of Cascadia should be under the Gold standard as its monetary system with an Central banking system.

The gold standard is a monetary system in which the standard economic unit of account is a fixed weight of gold. There are distinct kinds of gold standard. First, the gold specie standard is a system in which the monetary unit is associated with circulating gold coins, or with the unit of value defined in terms of one particular circulating gold coin in conjunction with subsidiary coinage made from a less valuable metal.
Similarly, the gold exchange standard typically does not involve the circulation of gold coins, instead using notes or coins made of silver or other metals, but where the authorities guarantee a fixed exchange rate with another country that is on the gold standard. This creates a de facto gold standard, in that the value of the silver coins has a fixed external value in terms of gold that is independent of the inherent silver value. Finally, the gold bullion standard is a system in which gold coins do not circulate, but in which the authorities have agreed to sell gold bullion on demand at a fixed price in exchange for the circulating currency.
No country currently uses the gold standard as the basis of its monetary system, although several hold substantial gold reserves.

A central bank, reserve bank, or monetary authority is a public institution that manages a state's currency, money supply, and base interest rates. Central banks also usually oversee some aspects of the commercial banking system of their respective countries. In contrast to a commercial bank, a central bank does not have a limit on it's ability to increase the nation's monetary base, and usually also prints the national currency, which usually serves as the nation's legal tender. Today, most central banks (especially in the west) monopolize money, and exchange legal tender notes for government debt
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 commercial banks and other financial institutions from reckless or fraudulent behaviour. Central banks in most developed nations are institutionally designed to be independent from political interference.
-wikipedia

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