Question

Importants
of Central Bank​

Answer 1

Answer:

Central banks play a crucial role in ensuring economic and financial stability. They conduct monetary policy to achieve low and stable inflation. In the wake of the global financial crisis, central banks have expanded their toolkits to deal with risks to financial stability and to manage volatile exchange rates.

Explanation:

However, the primary goal of central banks is to provide their countries' currencies with price stability by controlling inflation. A central bank also acts as the regulatory authority of a country's monetary policy and is the sole provider and printer of notes and coins in circulation.

It performs its functions with the help of commercial banks. The central bank is accountable for protecting the financial stability and economic development of a country. Apart from this, the central bank also plays a significant part in avoiding the cyclical fluctuations by controlling money supply in the market.

Central banks affect the quantity of money in circulation by buying or selling government securities through the process known as open market operations (OMO). When a central bank is looking to increase the quantity of money in circulation, it purchases government securities from commercial banks and institutions.

The principles on which a central bank is run are quite different from the ordinary banking principles: (i) An ordinary bank is run for profit. A central bank, on the other hand, is primarily meant to shoulder the responsibility of safe guarding the financial and economic stability of the country.

In short, central banking has been neither necessary nor sufficient for the development of a modern economy and financial system. ... The gold standard provided for stable prices over time, and the Fed's job was to maintain that standard (which does not require a central bank).

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Answer 2

Answer:

• central bank monitors the all other local banks in a country
• central banks control the work related to money
• it also takes care of credit issues.

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