Write short notes on need of a central bank.
Answers
Central bank is the supreme monetary institution, which is at the apex of the monetary and banking structure of a country. It is the leader of money market and as such controls, regulates and supervises the activities of commercial banks. It is the central monetary authority, which manages the currency and credit policy of the country and functions as a banker to the government as well as to the commercial banks. It is difficult to define central bank accurately.
However, different definitions have been given emphasizing one or more functions of the central bank. De Kock defined central as "a bank which constitutes the apex of the monetary and banking structure of the country."
A central bank is an independent national authority that conducts monetary policy, regulates banks, and provides financial services including economic research. Its goals are to stabilize the nation's currency, keep unemployment low, and prevent inflation.