Explain the bank of issue function of central bank
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The main function of a central bank is to act as governor of the machinery of credit in order to secure stability of prices. It regulates the volume of credit and currency, pumping in more money when market is dry of cash, and pumping out money when there is excess of credit. ... Issue department and Banking department.
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The central bank is the bank of issue. It has a 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
However, the currency issued by the central bank is its monetary liability. In other words, the central bank is obliged to back the currency issued by its asset of equal value such as gold, coins, and billions
Coins are manufactured in the Government mint but they are put into circulation through the central bank.
In addition to issuing currency to the general public, the central bank also issues currency to the central Government of the country.
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