How to Find the Best Forex Brokers in Czech Republic
Forex trading is a largely unregulated market for investment. However, many countries around the world where Forex is traded are bringing in their own rules and regulations and establishing regulatory bodies to oversee this lucrative industry. The reason for such regulation is to protect investors and ensure participants are operating in a fair and honest way. When anything new comes along there will be a wealth of individuals or businesses just waiting to scam naive investors out of their hard-earned cash. If you don’t want to become one of them you need to seriously consider choosing one of the CNB regulated brokers offering its services.
What is the CNB?
CNB is the Czech National Bank. It is the central bank of the Czech Republic and the supervisor of Czech financial markets, including Forex brokers in the Czech Republic. The bank has a significant history. But we’ll look at that a little further down the page. First, we’ll introduce you to some of its regulatory powers. The main role of the Czech National Bank is to maintain price stability and achieve a low rate of inflation in the country. This is seen as a contribution to the country’s economic growth. But the CNB also supports financial stability and ensures the sound operation of the Republic’s financial system. It is also responsible for setting monetary policies, issuing banknotes and coins and overseeing the distribution. In addition, there is a supervisory function for the bank to perform. It supervises organizations and businesses operating in the banking sector, capital markets, pension funds, the insurance industry, electronic money institutions, credit unions, bureaux de change, and Forex brokers in the Czech Republic. The CNB has a part to play in Forex trading because it sets the rules and regulations for the industry. It presides over many financial institutions, including CNB Forex brokers. Should any organization or business not conform to the regulations it will be subject to restrictions or penalties.
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A brief history of the Czech National Bank
In 1918, the kingdom of Bohemia no longer existed and in its place, Czechoslovakia was created. The creation called for a new central bank and currency and the first independent banking system was established. It was called The Banking Office of the Ministry of Finance. This new Office held the authority of the Minister of Finance and controlled the issuance and circulation of money and the government debt. Between 1921 and 1923, the country’s economy suffered a significant economic downturn. Strong deflationary policies were put in place by the Finance Minister to try and prevent further hyperinflation. The Finance Minister was seen as partly to blame for the downturn and this resulted in his assassination in 1923. 1926 came around and The National Bank of Czechoslovakia, and during the first couple of years the country enjoyed a period of economic prosperity. Manufacturing was successful, GNP reached an all time high and currency exchange was strong. At this time there were more than 100 banks and more than 200 credit unions. The American stock market crashed in 1929 and it wasn’t long before the Czech economy entered a depression. A further currency crisis was also created by the bank eliminating the ability to convert currency into gold. This resulted in a lot of unrest and several options were looked at to redress the balance. With so many different ideas being bandied around the country suffered political imbalance which in turn hindered the country’s economic recovery. World War II saw further changes when Czechoslovakia was annexed by Germany. It became part of Nazi Germany, and the National Bank became the National Bank for Bohemia and Moravia. The bank returned to its former name after the end of the war. 1950 saw the Central bank being nationalized and it became the State Bank of Czechoslovakia, formed under the new communist regime. Its role was expanded to that of a commercial bank, an investment bank, and central bank. At this time the State Bank had a number of different roles. It was a supervisory agent of the government, was in charge of economic planning, issued credit to individuals and watched over other state-owned banks and savings banks, along with overseeing the Commercial Bank of Czechoslovakia which was in charge of foreign currency exchange. Following the split of the Czech and Slovak Republic, the State Bank divided into two separate entities. The National Bank of Slovakia and the Czech National Bank.
The Czech National Bank and regulation of Forex brokers
The Czech National Bank is the supervisor of the financial markets and has authority over the banking sector, the insurance industry, capital markets, credit unions, pension funds, payment system institutions, and Forex brokers in the Czech Republic. It sets the regulations and rules for these industries and regularly checks in on them. Non-conforming organizations and businesses are subject to penalties and restrictions levied by the CNB. The Czech National Bank is responsible for determining the value of the country’s currency, the Koruna, against foreign currencies. It makes continuous adjustments and fixes the exchange rate.
How the Czech National Bank is able to protect consumers
An Act passed in 2008, gave the Czech National Bank new powers with regards consumer protection. The new powers allow the CNB to accept suggestions, notifications from consumers and complaints, conducts inspections of supervised financial institutions, publishes opinions, and answer eligible inquiries. The CNB’s new protection powers also involve it promoting financial literacy. Free manuals were handed out to local schools in 2008 and seminars were held for teachers. More recently, an interactive exhibition presented the work of the Central Bank and helped to increase young people’s interest in economics and finance. While we’ve spouted on about the role of the Central Bank we’ve forgotten to mention the importance of choosing a CNB Forex broker. Suffice it to say, you will be ensuring the best possible protection of your capital, and be at less risk of losing it all when your broker goes out of business.