Question

Give any two reasons for giving the monopoly right of note issue to the Central Bank.

Answer 1

The monopoly right of note issue are given to the central bank because of the following reasons (Any two) :

(i) It insures uniformity in the currency making it easy for people to identify it.

(ii) It facilitates effective state supervision and therefore regulates the issue of the paper currency by the bank.

(iii) It creates confidence among people.

(iv) It enables the government to maintain control over undue credit expansion and avoids danger of over issue.