Question

Explain the functions of the Central Bank.

Answer 1

hey user here is Answer

Question

in the functions of the Central Bank.?

Answer

Central bank has monopoly of issuing notes (except one-rupee notes, one-rupee coins and the small coins issued by the government) and thereby can control the volume of currency.

Answer 2

The functions of the Central Bank are as follows:

1. Monopoly of currency issue: The Central bank has sole power to print and issue the currency notes of the country. The basic reason behind this monopoly is to bring uniformity in the currency, better control and supervision, and also stability in the economy.

2. Lender of last resort: This means that if the commercial banks are in the crisis and are not getting any solution to their problems, they can approach Central Bank for the help. Central bank help them by converting their assets into cash at short notice and strengthens their cash position.

3. Clearing house: Central bank act as a clearing house to the commercial banks in which mutual claims of the banks are offset and payment is being made of the difference amount. This function helps the commercial banks to maintain low cash balance with them.

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