Does a national central bank effectively hold all of a country’s currency worldwide?
Banking
Asked by Question Bot05/Jun/20141 answer
1 Answer
F
Faisal Khan
Answered 05/Jun/2014
To answer your question, not sure if you are referring to National Bank as the equivalent of a Central Bank.
The nomenclature National Bank is usually associated with Government owned State Banks, for example in India this would be the State Bank of India, in Pakistan this would be the National Bank of Pakistan and so on and so forth.
If by National Bank you are referring to the Central Bank, the Central Bank of a country does keep the total ledger tabs of all the money inside the country. However, as part as parcel of operating a banking network, private & commercial banks are allowed to keep FX themselves and settle directly (overseas). They just report the same to the central bank.
Regarding BIS, the BIS is not the central bank of the world for settlement. Many people do not know that BIS has only 60 or so members.
In addition to this, BIS's functional activities are limited to the following: Products and services
The short of it is, the money is held by Central Banks, National Banks (State and/or Federal), Private Banks, Commercial Banks, Etc. In fact any of the following banks may retain deposits (if allowed). The Central Bank would be the authority to keep tabs on all types of deposits held.
The nomenclature National Bank is usually associated with Government owned State Banks, for example in India this would be the State Bank of India, in Pakistan this would be the National Bank of Pakistan and so on and so forth.
If by National Bank you are referring to the Central Bank, the Central Bank of a country does keep the total ledger tabs of all the money inside the country. However, as part as parcel of operating a banking network, private & commercial banks are allowed to keep FX themselves and settle directly (overseas). They just report the same to the central bank.
Regarding BIS, the BIS is not the central bank of the world for settlement. Many people do not know that BIS has only 60 or so members.
Algeria, Argentina, Australia, Austria, Belgium, Bosnia and Herzegovina, Brazil, Bulgaria, Canada, Chile, China, Colombia, Croatia, the Czech Republic, Denmark, Estonia, Finland, France, Germany, Greece, Hong Kong SAR, Hungary, Iceland, India, Indonesia, Ireland, Israel, Italy, Japan, Korea, Latvia, Lithuania, Luxembourg, Macedonia (FYR), Malaysia, Mexico, the Netherlands, New Zealand, Norway, Peru, the Philippines, Poland, Portugal, Romania, Russia, Saudi Arabia, Serbia, Singapore, Slovakia, Slovenia, South Africa, Spain, Sweden, Switzerland, Thailand, Turkey, the United Arab Emirates, the United Kingdom and the United States, plus the European Central Bank.Source: Organisation and governance
In addition to this, BIS's functional activities are limited to the following: Products and services
The short of it is, the money is held by Central Banks, National Banks (State and/or Federal), Private Banks, Commercial Banks, Etc. In fact any of the following banks may retain deposits (if allowed). The Central Bank would be the authority to keep tabs on all types of deposits held.
The Central Bank, who is the issuer and custodian of a particular currency, does know the total number in circulation (be it within the country and/or abroad). They just know the number, they certainly do not hold all this currency, as it has been loaned out to the banks who further have loaned it out, or is in circulation in the money supply.