In accordance with its primary objective, the CNB sets monetary policy, issues banknotes and coins and manages the circulation of the Czech koruna, the payment system and settlement between banks.

[2] The Czech National Bank, located in Prague at 28 Na Příkopě, has remained in the same building through multiple government transitions.

The Bank oversees the legal and technical protection of the currency, the Koruna (also called the Crown).

With no political or public urgency, the Czech Republic will most likely not join the Euro Area and adopt the Exchange Rate Mechanism in the coming years.

In order to keep prices stable, the Central bank implements tools, such as setting interest rates.

The aim of these operations is to influence short-term rates which subsequently affect economic activity, the flow of capital, and inflation.

By controlling the Minimum Reserves, the Central bank helps the interbank system run smoothly.

[2] FX interventions: By purchasing foreign currencies against the Czech Crown, the Central Bank limits risk in the market.

Under the regulation of the Ministry of Finance, the central bank continually adjusts and fixes the exchange rate.

Further involvement of the Czech National Bank in Financial markets is the analysis of inflation expectations.

Because of the central banks immediate response to new reports regarding exogenous shocks, policy changes and other market conditions, changes in interest rates and exchange rates prove to be good signals for the central banks market expectations.