Question

Assertion (A): The Central Bank is the sole custodian of foreign currency reserves.

Reason (R): The Central Bank has the monopoly of note issue.

Options

• Both (A) and (R) are true and (R) is the correct explanation of (A).

• Both (A) and (R) are true but (R) is not the correct explanation of (А).

• (A) is true and (R) is false.

• Both (A) and (R) are false.

Answer 1

Both (A) and (R) are true but (R) is not the correct explanation of (А).

Explanation:

The Central Bank is the only organization that can print money and monitor foreign currency assets. Both claims are true, but the fact that they are the only ones who can print money is not why they oversee foreign reserves.