Question

Central Bank of India (conclusion )150 to 200 words answer only in 150 to 200

Answer 1

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Answer:

The central bank controls the issue of notes. It has the sole right (monopoly) in note issue. It prints notes and authorises the minting of coins by the Mint.

Old notes and coins are removed by the commercial banks as they deteriorate. The central bank thus provides us with the much-needed medium of exchange. In other words, central bank notes and coins are legal tender.

In most countries note issue by the central bank is based on a particular principle. In order to prevent an over-issue of notes, apart from a fiduciary issue (that is, notes backed by securities), all notes are to be backed by an equivalent amount of gold in the bank. How­ever, over the years, the fiduciary issue has risen steadily and, today; the whole of the note issue is fiduciary.

To regulate the supply of currency the central bank in every country has been given the monopoly right to issue paper-notes in accor­dance with the existing legal provisions.

The central bank acts as the banker to the govern­ment of the country. It keeps the cash balances of the government and maintains its accounts. It gives advances to the government and also takes the responsibility of the sale of govern­ment securities. It manages public debt and gives advice to the government on various financial matters.