Central Banks: A Short History Of Their Ever Rising Power

Until the early twentieth century, the purpose of central banks was to stabilize and control the value of the currency. When currency was backed by gold, that was reasonably easy to do. The amount of money placed into circulation was limited to the amount of gold held in reserve. By the early twentieth century, however, countries, including the U.S. shifted away from a gold-backed currency to fiat money. This changed the functions of central banks from stabilizing currency to actively affecting global economic decisions.