A central bank is a financial institution that manages a country’s monetary policy toward a goal of economic and financial stability. They generally have mandates that include the issuance of national currency, maintenance of the value in their currency, ensuring financial system stability, controlling credit supply, serving as a lender of last resort to other banks and acting as their government’s banker.
In most situations, a central bank will manage the monetary policies of a single nation but some central banks will manage a group of nations, such as an economic union. Some of these include the European Central Bank, Bank of Central African States, Central Bank of West African States, Eastern Caribbean Central Bank and the West African Economic and Monetary Union.
With a few exceptions, all countries will have a central bank or central banking system that they will use. Smaller nations, such as Kiribati, Marshall Islands, Micronesia, Nauro, Palau and Tuvalu, do not have a central bank. Other nations, such as Greenland or the Faroe Islands, will use a central bank from a related nation.
We have divided up central banks into 8 regions, which are North America, South America, Western Europe, Eastern Europe, the Middle East, Africa, Asia and Southeast Asia & Oceania. You will find central banks in each of these regions with data that you can analyze.
There are also global institutions that provide banking and monetary assistance to countries outside of their own cental bank. A few of the key institutions include the World Bank, the International Monetary Fund (IMF) and the Bank of International Settlements (BIS).
Each central bank analyzes and publishes their country's economic data, which helps investors to better understand the country specific risks and advantages that an investor in that country may experience.
Central bank data that outlines a country's economic condition is commonly released monthly through different reports.
A central bank will review a multitude of economic reports and surveys to compile their findings on the state of the economy and the effects on monetary policy. Each central bank has its own set of reports that it will release and, as you may expect, some central banks are more transparent than others.
Some of the key data that a central bank will monitor and release includes money supply, interest rates, inflation, bank reserves, manufacturing, economic conditions and business outlook.
The most successful investors and risk managers use every tool at their disposal, which includes understanding and using central bank data. While this is not the only economic data to review, it provides a good summary of the economic and financial condition of the country, which helps to define some of the risks and rewards in their financial markets.