... other members. There is much irony in this. The Bretton woods supported exchange rate stability and in good measure price stability. If exchange rate stability is one of the objectives of monetary policy then the anti-cyclical stabilization function, supported by Keynes who is one of the architects of the Bretton's Woods, cannot be achieved at one and the same time. Thus, Keynes had also challenged price stability as the major function of macro economic policy. The use of money supply and in particular fiscal policy was for the purpose of counter cyclical policy." (Dr Sheri Marcose, http://courses.essex.ac.uk/ec/ec248/markose4.pdf, page 1) We will try to see the role of central banks more precisely through the comparison of Federal Reserve System and the Bank of England but let us discuss first the role of Central Banks generally. 2. CENTRAL BANKS Central Banks created in order to serve the governments financial matters such as ...

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