Question

How many systems of note issue of central bank. Explain it ?
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Answer 1

The function of issuing bank notes is almost uni­ versal with central banks. In most cases the banks have had this privilege from the beginning; indeed, in many instances the primary purpose of establish­ ing the bank was to provide a paper money issue, and often the term “bank of issue” was used synony­ mously with “central bank.” One scholar has stated that “The primary definition of central banking is a banking system in which a single bank has either a complete or a residuary monopoly of the note issue.”
The importance of the note issue function has varied greatly over time and among countries. It is a major function of virtually all central banks since their notes make up a very large part of the circulat­ ing currency. It is the dominant function in those countries where the note issue is the dynamic or determining element in the total money supply. In the more advanced countries of the W estern W orld, however, demand deposits make up the bulk of the money supply and are the medium through which most changes in that supply are brought about. The note issue function is correspondingly less important in such countries.