ABSTRACT
Central banks have two main interrelated functions, first the macro-function of maintaining nominal price stability and second the micro-function of ensuring the healthy development of the payments, banking and financial systems. The functions are interrelated because the stability of the banking system will be threatened by high and volatile inflation, while the price mechanism in turn is likely to be disturbed by booms and busts, especially systemic crises, in the payments and banking systems, and perhaps within the wider financial system as well.
