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प्रश्न
Explain the ‘bank of issue’ function of a central bank.
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उत्तर
The central bank holds the exclusive authority to issue currency notes, making it the bank of issue. The notes and coins it issues are considered legal tender. In India, except for the one-rupee notes, which are traditionally issued by the Government of India, all other currency notes are issued by the Reserve Bank of India (RBI).
The issue department of the central bank is solely responsible for issuing currency notes and coins. To prevent misuse of this authority, the central bank must adhere to certain rules, which differ from country to country. In most nations, including India, the central bank is required to maintain a minimum reserve of gold and foreign exchange securities to support the currency it issues.
