Question

3.2. Discuss the following functions of the Central Bank in detail:
3.2.1. Bank of other Banks.
3.2.2. Controls credit in the economy.​

Answer 1

Control of credit: The central bank has power to regulate the credit creation by commercial banks. The credit creation depends upon the amount of deposits, cash reserves, and rate of interest given by commercial banks. ... Therefore, they have the power to control the amount of credit creation of commercial bank.

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Answer 2

Answer:

Control of credit: The central bank has power to regulate the credit creation by commercial banks. The credit creation depends upon the amount of deposits, cash reserves, and rate of interest given by commercial banks. ... Therefore, they have the power to control the amount of credit creation of commercial bank.