The Central Bank in today's world plays a key role in the role of an economy to operate efficiently and effectively. Central banks began operating in the United States in 1914. The Central Bank, commonly referred to as "the Fed", performs a variety of functions that have developed over the years. These functions play a vital importance in the functioning of our economy. The Central Bank The central bank is a financial institution that organizes the government's finances, controls the currency and credit of the economy, and assists commercial banks as a bank. The role of central banks is to create money and develop monetary policies. Monetary policy can be used to provide assistance in the way an economy currently operates. Monetary policy has two effects, an expansionary policy and a restrictive policy. Expansionary policy helps lower interest rates and increase inflation in the economy; this policy improves short-term growth for the overall performance of the economy. On the other hand, a restrictive policy does the exact opposite of an expansionist policy. Restricted reduces growth and inflation in the economy. Another role of central banks is to manage the payment system through interbank payments. This role of central banks provides loans when the economy is not operating at maximum financial capacity. Finally, the central bank supervises commercial banks, where it ensures that the financial system gives citizens confidence in its strength. The objectives of central banks are to ensure low and stable inflation, high economic growth, stable financial markets, interest rate stability and exchange rate stability. Objectives of Central Banks Inflation in an economy is much more desirable when it is low.... .. middle of paper ......ConclusionThe central bank is extremely important for the smooth functioning of an economy. Central banks must play many roles to stabilize the economy. However, stabilizing the economy by performing certain functions may not be enough. Sometimes other central banks are needed to improve overall performance. As the article states: More Russian incursions would hurt Ukraine's economy: central bank. Central banks today constitute a complex structure with various functions that function as the “heart” of the economy. Works Cited Yukhananov, A. (2014, 4 13). Reuters. Retrieved from Reuters: http://www.reuters.com/article/2014/04/13/us-ukraine-crisis-cenbank-idUSBREA3C0P520140413Zeng, M. (2014, 3 20). The Wall Street Journal. From the Wall Street Journal: http://online.wsj.com/news/articles/SB10001424052702304026304579451800791002312