Question

Explain Banker’s Bank as a function of Central bank?​

Answer 1

Explanation:

* Central bank serves as a bank to other commercial banks and its relation with other banks is akin to the relation of commercial banks with their customers. Central bank acts as a banker’s bank in following three capacities :

1. Central bank is the custodian of the cash reserves of the commercial banks.

2. Central bank is the lender of the last resort.

3. Central bank acts as a bank of central clearance, settlement and transfers.