The different financial institutions within a country is regulated and monitored by the central bank of that particular country. This central bank ensures that the financial and economical state of the country is in right shape and is not deteriorating. The concept of having a global central bank was coined in 2008 when a huge financial crisis had hit the global financial markets. Various international institutions and banks have collapsed due to poor management and regulation from central bank of their respective countries. Therefore, need for a global central bank has emerged at that time. A global central bank could be a great idea as it can oversee the global financial system and ensure stability in financial markets worldwide.
A global central bank is need of the hour because of the fact that IMF is no longer a stronger institution with influence over rich industrialized countries and its relevance in other countries are also going down. Therefore, a global central bank with participation of each region equally can help in better stability of global financial markets and economics. The global central bank can monitor the global financial markets and assess the risk that may be involved and can give early warnings to global participants in an effective manner. It can keep an eye on global exchange rates of different countries and can help considerably to reduce the trade and financial imbalances. Though a global central bank will not mean that there would be no need for central bank of respective country, the central bank of nations will still be operative and will be managing monetary policies of their nation, but they will have considerable influence of global central bank to make policies which are compatible for global growth and financial stability.
All these factors makes global central bank a good idea for the overall stability of the global economies and their growth.
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