Question

State any two points of importance of Central Bank.

Answer 1

1. Control of banking system: The central bank takes on the important role of developing a strong, efficient, and well-functioning commercial banking system to support the financial needs of the nation’s trade, industry, commerce, and agriculture. To achieve this, it oversees, controls, guides, and inspects the activities of banks. Any matters related to setting up new banks, their growth, mergers, or opening new branches require the approval of the central bank.
2. Promotional work: In developing countries, the central bank plays an active role in promoting commercial banking. For instance, it implements policies to ensure credit is made available to priority sectors. It also takes steps to keep the exchange rate stable. In addition, the central bank issues guidelines for preferred areas of investment and regularly provides updates and data on the overall economic situation.