ABSTRACT
Central banks, like other public institutions, are in a state of constant evolution and their role does not remain fixed over time. This chapter shows that central banks have been born in most cases as private institutions, which were not at all neutral, for example in their credit allocation, and mostly pursued a private interest. The evolution of central banks in the last two centuries can be seen in different ways, but there is at least a current of thought that this is an overall benign evolution. Communication is probably key in fostering trust and major central banks are in fact investing heavily in this domain. One core criticism of central banks builds on the idea that they are central planners and, like all central planners, they are subject to the 'knowledge problem' - they do not have enough information to decide on the optimal allocation of scarce resources.
