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A central bank is a privately held refinancing bank of last resort, thus a monetary monopoly. Most will hold reserves of some description, usually foreign currency and gold reserves. Advocates of central banking argue that a National bank, which is chartered by the government and carries out government-designated monetary policy, is too susceptible to political pressure, which may come from factions that are incompetent to make monetary policy. Hence the expression, "the independence of the Federal Reserve," the U.S. Federal Reserve Bank being an example of a Central, as opposed to National, bank.

Central banks are often said to be more powerful than governments, although generally governments have some leverage over them. The chairman of the U.S. Federal Reserve Bank, for example, is appointed by the President of the U.S., and his choice must be confirmed by the Congress. Central banks of various nations often deliberate jointly on monetary policy, and the combined power of central bank leaders is extraordinary. The founder of Australia's Reserve Bank, H.C. "Nugget" Coombs, once bragged he belonged to the "international freemasonry of central bankers".

Central banks are part of the infrastructure used by the private banking community of a given country, to influence their country's economyEconomics is the social science studying how society uses its limited resources to meet desires and wants. Put otherwise, economics studies what, how and for whom society produces. This involves analyzing the production, distribution and consumption of go. Central banks in different countries have a range of influence over exchange rateIn finance, the exchange rate between two currencies specifies how much one currency is worth in terms of the other. For example an exchange rate of 120 Japanese Yen to the Dollar means that ¥120 is worth the same as $1. An exchange rate is also known ass. Some exchange rates are managed, some are market based and many are somewhere in between. Typically a central bank seeks to impose centralised control over market priceMarket price is an economic concept with commonplace familiarity; it is the price that a good or service is offered at, or will fetch, in the marketplace; it is of interest mainly in the study of microeconomics. Market price is one of a number of ways ofs such as the price of credit. This is called interest rateAn interest rate is the 'rental' price of money. When a resource or asset is borrowed, the borrower pays the lender for the use of it. The interest rate is the price paid for the use of money for a period of time. One type of interest rate is the yield on policy.

Central banks influence interest rates through a policy lever called open market operations.