Central banks play a crucial role in maintaining economic stability. Here’s how they do it:
1. Monetary Policy: Central banks control the money supply and interest rates to influence economic activity.
2. Inflation Control: By adjusting interest rates, central banks aim to keep inflation within target ranges.
3. Financial Stability: Central banks oversee and regulate financial institutions to ensure a stable banking system.
4. Currency Management: Central banks manage currency reserves and exchange rates to stabilize the national currency.
5. Economic Research: Central banks conduct research and analysis to inform policy decisions and economic forecasts.
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