explain any three functions of central bank
Answers
Answer:
Eight major functions of central bank in an economy are as follows: (1) Bank of Issue, (2) Banker, Agent and Advisor to Government, (3) Custodian of Cash Reserves, (4) Custodian of Foreign Balances, (5) Lender of Last Resort, (6) Clearing House, (7) Controller of Credit, and (8) Protection of Depositor's Interest.
Explanation:
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Answer:
- Regulator of currency.
it has the monopoly of note issue. Notes issued by it circulate as legal tender money. it has its issue department which issues notes and coins to commercial banks. Coins are manufactured in the Government mint but they are put into circulation through the central bank.
- Controller of credit
One of the functions of the central bank is the controlling of credit which in turn controls the inflation rate within the economy. it is important to understand that the central bank cannot prevent of eradicate the inflation rate. However, they do monitor and control credit rates
- Clearing house for transfer and settlement
A clearing house is an intermediary between buyers and sellers of financial instruments. it is an agency or separate corporation of a futures exchange responsible for settling trading accounts , clearing trades , collecting and maintaining margin monies , regulating delivery, and reporting trading data .
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