CNB Czech National Bank

The Czech National Bank (CNB) is the central bank of the Czech Republic, serving as the country's monetary authority and supervisor of the Czech financial market. The CNB is located in Prague and operates in accordance with the Constitution of the Czech Republic, the Act No.

6/1993 Coll. on the Czech National Bank, and other relevant regulations. It is a legal entity of public law that carries out its activities through its headquarters in Prague and its regional offices in Ústí nad Labem, Plzeň, České Budějovice, Hradec Králové, Brno, and Ostrava.

The CNB is part of the European System of Central Banks (ESCB) and participates in meeting the objectives and tasks of the ESCB. The CNB is also part of the European System of Financial Supervision; it therefore cooperates with the European Systemic Risk Board and other European Supervisory Authorities.

Basic Objective and Monetary Policy

The basic objective of the CNB is to maintain price stability, as stated in Article 98 of the Constitution of the Czech Republic and as part of the EU primary law.

Price stability refers to creating and maintaining a low-inflation environment, a precondition for sustainable economic growth. The CNB must operate independently and formulate and implement its monetary policy independently from other authorities, including the government. In general, the CNB sets interest rates, controls the money supply, and stabilizes the koruna.

Financial Stability and Supervisory Role

In addition to its monetary tasks, the CNB plays a crucial role in maintaining financial stability and ensuring the proper functioning of the Czech financial system. The CNB sets macroprudential policy by identifying risks that threaten the stability of the economic system and enhancing the system's resilience.

The CNB will supervise:

• The banking sector

• The capital market

• The insurance sector

• Pension funds

• Credit unions

• Electronic money institutions

• Foreign exchange offices

Through supervision of these institutions, the CNB ensures the reliability and transparency of the country's financial system.

Issuance of Currency and Payment System Oversight

One of the principal tasks of the CNB is to issue banknotes and coins and manage their circulation in the Czech koruna. It supervises the payment system, ensuring safe and secure settlements between banks, and processes transactions within the Czech Republic.

As the state's banker, the CNB provides banking services to the government and public sector; manages accounts for entities connected to the state budget; and cooperates with the Ministry of Finance regarding government bond issuances and financial market investments.

Governance and Organizational Structure

The CNB's highest governing body is known as the Bank Board, which consists of the Governor, two Deputy Governors, and four other members. The President of the Czech Republic appoints the members of the Bank Board for a maximum of two six-year terms.

This governance structure enables the CNB to remain independent and shields it from political influence regarding monetary policy and financial supervision.