The history of Central Bank Law


Si Gyeongmin

Jul 15, 2021

The Central Bank Law refers to the general term for regulating the legal relationship of the central bank, which mainly includes the nature, legal status, organizational system, rights and obligations of the central bank, and its relationship with the government as well as economic management departments. The central bank is the core of a country’s financial industry. It is generally believed that the central bank has basic functions such as issuing bank, bank of the bank, government bank, clearing bank, regulating bank, and supervising bank.

Identify a country’s central bank based on its position and function in the financial system. The central bank is an inevitable result of the highly developed market economy. The first central bank law in the world was the "Bank Charter Act of 1844" promulgated by the United Kingdom in 1844. This regulation stipulates that the Bank of England, as an issuing bank, enjoys the monopoly of pound issuance. As a bank of the bank, it has unified deposit reserves of each ordinary bank, acts as the bill clearing center of various financial institutions and acts as the "lender of last resort". As a government bank, it accepts government deposits and manages the treasury. The Bank Charter Act of 1844 provided a blueprint for the establishment and enactment of central banks in various countries. At present, all countries in the world have basically enacted central bank laws. Among them, the most influential laws include the Federal Reserve Act, the Bundesbank Act, Banque de France Act, the Bank of Japan Act, the Swedish Bank Act, and the Monetary Authority of Singapore Act, etc.

There are two main legislative models of the Central Bank Law. One is consolidated legislation, that is, the unified legislation of the central bank, commercial banks, professional banks, and other banking financial institutions, collectively referred to as the Banking Law. The other is separate legislation, that is, to enact the Central Bank Law and Commercial Bank Law separately, and even separate legislation for professional banks and other types of banking financial institutions.


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