Question

Explain in short, any three functions of the Central Bank.

Answer 1

The three functions of the central bank are as follows:

1. Issue of currency notes: The country's central bank has a monopoly on issuing currency notes. The central bank stores gold, silver, and other precious metal reserves in order to issue money.
2. Banker to the government: The central bank serves as the government's banker, agent, and advisor. It receives and makes payments on behalf of the government like a banker. In financial affairs, the central bank acts as the government's agent. It provides advice to the government on monetary and banking issues.
3. Banker's bank: The central bank serves as the bank for all of the country's commercial banks. When a commercial bank needs money, it can borrow money from the central bank and rediscount its bills. As a result, it is known as a lender of last resort.