 Bismillahir Rahmanir Raheem. We have completed almost all topics in monetary theory. So now we move on to second part of our course that is monetary policy and monetary policy decisions are taken by central bank of the country or of an economy. So that is why we start our policy side from central banking and the topic of this lecture is origins of the central banking. We will start with central banking and then we will move on to monetary policy and its tools and objectives. Since central banks make policy, let us look historically at when central banks have started in the world and what central banks used to be and what were their traditional functions and then we will look at the functions of today's central banks and the functions of the state bank of Pakistan. So let us first look at what happens to central banks. A central bank is a government authority in charge of monetary policy. Central bank's work is a government's organization, a government's authority whose work is to conduct monetary policy. There are other functions but this is a main function. The actions of central bank, the policy decisions can affect the interest rate, the amount of credit, the money supply, the financial markets, the economic activity and the exchange rate or inflation rate. This means that the actions of central bank affect almost each and every economic variable. So what is this central bank and what are its actions and what do they affect? Now if we look at the oldest central bank in the world, i.e. the first central bank was made, then which was made or so. How did central banks become over time? So the first central bank in the world that we know from our history is the Swarious Ricks Bank or Swariges Ricks Bank, you can pronounce it in both ways. It is basically the Bank of Sweden which is the world's first central bank which was made in 1668, i.e. approximately 350 to 450 years ago. Then the second bank of England was made which was made in 1694. So these are the oldest central banks in the world because these are the 17th century banks, 17th century Swariges Ricks Bank and Bank of England. These are both central banks of Sweden and England. Now in the early days, we are talking about centuries and centuries ago, so we will look at the functions of the old central bank. In today's time, we will discuss the functions of central banks in detail in the next lectures. But the functions of the old central banks are summarized in a slide. The functions of the old central banks is that the function of the Swariges Ricks Bank was lending money to the government of Sweden. It was a prime objective. It was lending money to the government i.e. it would fulfill the government's budget deficit. Buying government debt, i.e. it would buy government's debt. It would offer government debt to take the loan. So it would buy the central bank of Sweden. Then securing cashless international payments to increase efficiency. i.e. one of its objectives was that international payments should be made in such a way that the currency should not be physically involved so that the transactions of international trade would increase the economic efficiency. Then it had an objective to maintain monetary stability i.e. the stability of money and the value of the currency. So we have discussed the two banks. The Swariges Ricks Bank and the second is Bank of England. After that, we will discuss the world's most famous central bank, Federal Reserve, which is also known as Fed. Since we are reading history, this is the time when the banks of Pakistan did not create the central banks of Pakistan. So we are talking about the revolution. The first two banks I have mentioned were from the 17th century. This is the 20th century. Federal Reserve System or Fed also says that this is basically the central bank of the US. Initially, in the US, the opposition to making the central bank continued. i.e. in European countries, the central banks became the central banks. But the US was not able to make them. So the opposition was politically focused on the general public that it would concentrate on the financial powers at one place. But from 1870 to 1907, the financial crisis came into the US, after which people thought that there is only one way to escape from this crisis, that we should make our central bank. After which, in 1913, the Federal Reserve System became the central bank. But since the primary opposition was that if the opposition of power was not formed, the design of the Federal Reserve System is that if there are 12 regional Federal Reserve Banks in it, then the powers were distributed to them, i.e. that the powers should not be concentrated at one place. And this Federal Reserve is privately owned by its members bank, i.e. the ownership of the member bank. After that, if we look at the emerging economies, then as the time increased, the emerging economies, i.e. the less developed countries when they started developing and they started developing, like you can take an example of Japan, or many other countries like South Korea, Taiwan, so any emerging economies they also started establishing central banks with their own time. But most of their central banks only formed when they got independence, i.e. they were colonies before, with some other country, with some other people. So as soon as that colonialism was over and these countries became independent and then they started developing, they also started making their own central banks. But their style of central banks was like European central banks. European central banks are not, European central banks mean that the central banks in Europe had a structure like that. Most of them do not have a structure with the US, rather they have different central banks in Europe. Now, who owns the central banks? Let's discuss this a little bit. These are different ownership structures in different countries. For example, Bank of Italy that is privately owned by commercial banks, which are its member banks, they are also its owners. So this is privately owned. Fed is partially privately owned, partially publicly owned. Other than that, European central banks, now I am talking about ECB, European central bank, the European central bank. Whose ownership is this? It is the ownership of its member countries, the ownership of their central banks. Then there is a system in many places that a small fraction of the central bank ownership is privately owned, but mainly it is a public institution. For example, Belgium, Greece, Switzerland, Japan, Turkey, South Africa, in these countries, a small fraction of the central bank ownership is privately owned, whereas the major share is of the public sector. Over time, the functions of central banks have changed because we are discussing history now, we will discuss the functions in detail later. So these changing functions of central bank means that when we go from the 18th century, then how the functions of central bank have changed over time? So historically, different functions have changed over time. In that, issuing bank note was a function, regulating banks, monitoring international payment system was a function, regulating exchange rate, financing government, and sporting banks with short liquidity. These functions are present today as well, and we will discuss them in detail in the next lecture. Thank you.