Introduction to Finance

SAMPLE – VOID
DOLLARS
Drawee Bank
(Irving Trust Company)
FOR
20
1-67
210
1 2 9
State or City
(New York City)
Check
Serial Number
Customer’s Account Number
Federal Reserve District
Federal Reserve Bank
of New York
Immediate Credit Availability
in New York
Routing Number
Check Digit (8)
ABA Bank Number (0067)
Routing Symbol (0210)
FIGURE 4.5
 Traditional Use 
of Check Routing Symbols

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98
C H A PT E R 4 Federal Reserve System
4.7
Central Banks in Other Countries
GLOBAL
Central banks in other developed countries, like the U.S. Fed, are responsible for regu-
lating the country’s money supply, safeguarding the country’s currency, and carrying out the 
country’s monetary policy. Most other countries have a single central bank with branches that 
diff er from the Fed’s 12 Reserve Banks. Of course, the Fed BOG has eff ectively centralized 
control of U.S. monetary policy.
Empirical evidence shows a link between central bank independence from government inter-
vention and infl ation and economic growth rates. In countries where central banks are relatively 
independent from their governments, there have generally been lower infl ation rates and higher 
economic growth rates than in countries where central banks are closely tied to their governments.
Three economically important foreign central banks are those of the United Kingdom, 
Japan, and the European Monetary Union. The central bank in the United Kingdom is the 
Bank 
of England (BOE)
. It was created well before the formation of the Federal Reserve System in 
1913. The BOE is managed by a governor and fi ve additional offi
cers, all of whom are appointed 
for fi ve-year terms. The BOE governor reports to the chancellor, who has fi nal responsibility for 
setting monetary policy. In contrast with the United States, commercial banks in Great Britain 
are not required to hold reserves at the Bank of England. Also, recall from Chapter 3 that Great 
Britain does not legally separate commercial banking and investment banking activities.
The central bank of Japan, called the 
Bank of Japan (BOJ)
, was created in 1947. The top 
offi
cial of the BOJ is the governor, who heads the Policy Board, which is the central decision-
making authority. The governor and some members of the board are appointed by the Japanese 
equivalent of the U.S. Congress, and other board members are appointed by the fi nance minister. 
Japanese commercial banks, like their U.S. counterparts, are required to hold reserves on deposit 
with the BOJ, and banks can borrow at an offi
cial discount rate from the BOJ.
The