The public body that sets monetary policy, supplies reserves to banks and often supervises them. Its actions move rates and liquidity.
Where you will meet it
Central bank comes up in 19 learning outcome notes across the FRM syllabus.
A few of them:
Foreign Exchange Markets FRM Part I · Financial markets and products
“Government factors include trade barriers, which lower import demand, and central bank intervention, where selling the domestic currency to buy foreign currency weakens it.”
Machine-Learning Methods FRM Part I · Quantitative analysis
“Uses in finance include sentiment scoring of news and earnings calls, reading central bank statements, extracting risk disclosures from filings, and chatbots.”
Global Financial Stability Report, Chapter 2 FRM Part II · Current issues in financial markets
“They include stress tests with geopolitical scenarios, adequate capital and liquidity buffers, central bank liquidity backstops, supervision of concentrated exposures, and oversight of fund liquidity.”
Liquidity and Leverage FRM Part II · Liquidity and treasury risk measurement and management
“A fractional reserve bank funds long-term, illiquid assets such as loans with short-term, liquid liabilities such as demand deposits, keeping only a fraction of deposits as reserves of cash and central bank balances.”
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