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Central Banks

Every government in the world has a mechanism to control the supply of its currency. In most countries, it's a national bank, and these are key players in the currency markets. Each bank has a different reputation. Under Alan Greenspan's direction, the Fed reacts aggressively to changes in the economy. The Bank of Japan (BOJ) is known to frequently intervene with inconsistent results. The European Central Bank, although it has existed for only a few years, has resisted enormous political and public pressure to raise rates. It insists that its fundamental function is to keep inflation low, inspiring some to argue that the bank is fighting the last war and not the new one of high unemployment and low growth. Other national banks are considered little more than figureheads, without sound leadership or financial muscle to move the markets.


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