The importance and role of the Central Bank in the creation of a healthy monetary and investment policy

The paper's starting point is finding an answer to the question: What kind of monetary policy should be followed by the Central bank in new market circumstances? As a major monetary institution, the Central bank should provide credibility for its monetary policy, which is particularly important during a macroeconomic stabilisation. In order to choose the most appropriate monetary policy, its creators should be familiar with the monetary policy's effects on economic activities, first of all on investment activities and the period in which they may occur. The Central bank uses its special status and authorisations to control monetary trends, to keep and handle foreign exchange reserves, to keep banks' required reserves, to manage the country's debt, to be the final creditor of the banking system, to take care of the banking system's liquidity. That is why the Central bank has become important for the functioning of the whole financial market, and especially the monetary market. The Central bank has both direct and indirect influence on the most important events on financial markets, financial system, as well as a wider influence - on a country's whole economy. In order to envisage the financial market's impact on monetary and investment policies, one should begin with the Central bank's role on the financial market, and at the same time analyse the financial market's instruments and institutions.