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Define Or Explain the Following Concept. Central Bank as Bank of Issue - Economics

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Question

Define or Explain the following concept.

Central Bank as Bank of Issue 

Solution

The Central Bank is the sole entity that can print currency notes. In other words, the central bank of a country has the exclusive authority to issue the currency (notes + coins). The currency issued by the central bank is known as 'legal tender money' i.e. the value of such currency is backed by the central bank. Since, issuance of notes is exclusively reserved for the Central bank, it is said to be the ‘Bank of Issue’.

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APPEARS IN

 Micheal Vaz Solution for Micheal Vaz Class 12 Economics (2019 to Current)
Chapter 13: Central Banking
Exercise | Q: 1.7 | Page no. 121
Solution Define Or Explain the Following Concept. Central Bank as Bank of Issue Concept: Monetary Function of Central Bank.
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