What is a central bank?
A central bank is a public institution responsible for core monetary functions. In Türkiye, the Central Bank of the Republic of Türkiye (CBRT) carries out these duties. It is different from a commercial bank serving retail depositors.
Functions and tools
1. Mandate and independence The CBRT’s primary objective is price stability. The objective is distinct from its instruments, such as interest-rate and liquidity operations. Central-bank mandates and legal safeguards vary across countries. 2. The balance sheet Banknotes, banks’ reserve balances, foreign assets and securities operations appear on a central bank’s balance sheet. The quantity of money is not simply the number of banknotes printed: bank deposits and lending also matter. 3. Banking system role Banks use central-bank accounts to settle payments and meet obligations. A central bank can support payment-system stability and, subject to conditions, act as a lender of last resort. This is not an unconditional guarantee against losses. 4. Transmission Policy changes can affect market rates, credit, demand, expectations and eventually prices. The speed and strength vary. A rate decision does not mechanically change inflation overnight.
How decisions affect the economy
5. Distinct institutions Governments choose taxes and public spending; commercial banks accept customer deposits and make loans. Central banks conduct monetary policy and perform financial-system functions. These institutions interact but have different powers. 6. Reading decisions Look beyond the headline rate to the decision text, inflation expectations, liquidity and the policy framework. Loan rates need not move point for point with policy rates. Check official central-bank releases for current rules.