Where money comes from
Most money is not printed notes. It is created when commercial banks make loans: when a bank lends you KSh 100,000, it adds that amount to your account. The central bank controls this process by setting the interest rate and the rules banks must follow.
Central banks in Africa include the South African Reserve Bank (SARB), the Central Bank of Kenya (CBK) and the Central Bank of Nigeria (CBN). Their main job is to keep inflation under control.
Questions people ask
What is a real interest rate?
The interest rate minus inflation. A positive real rate means savers gain buying power; a negative one means they lose it.
Why does the naira or the rand fall so much at times?
Inflation differences, interest rates, oil and commodity prices, debt in dollars and investor confidence all play a part. Big moves often come when several of these turn at once.
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Educational content only, not financial, investment or tax advice. Trading forex and CFDs carries a high risk of losing money. Look up any term in the trading glossary.