1. Some General Remarks on “Central Banking”

The paradox is that although no generally accepted definition of a “central bank” seems ever to have existed, everybody will recognize a “central bank” when they see one. However, the question could very well be asked if they are banks at all, or whether or to what extent they are just special government offices staffed possibly by a few bankers, countless numbers of a peculiar type of economists, bureaucrats, and occasionally even politicians. This, of course, also raises the question whether “central banks” are really necessary. After all, the world did quite well (from an economic point of view) a long time before anybody had invented the term “central banking” or “central banks”. The answer is, of course, that the concept of a “central bank” has developed over time, and that the concept has, historically, differed considerably between countries.