THE ACTIVITY OF THE CENTRAL BANK AND THE VIEWS OF THE AUSTRIAN SCHOOL OF ECONOMICS

Abstract

During recent decades, politicians and most economists have increasingly highlighted the positive aspects of the state\'s activity in the economy. This activity (interventionism) is supposed to solve problems arising from market imperfections. It is also used to ensure the financial stability of the entire economy. The main features used in these activities are: fiscal policy and monetary policy. Monetary policy is guided with indirect methods by the central bank. The main purpose of this public institution is to ensure economic growth and avoid inflation. It uses three main tools to do it: interest rates, open market operations, and reserve requirements. Despite the great importance for the process of a market economy, attributable to the central bank, it has also bitter rivals. Some of them are for example economists from the Austrian school of economics. The purpose of this article is to present central banking activities, and views of the Austrian school of economics.