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Give Reason Or Explain the Following. - Economics

Short Note

Give reason or explain the following.

Central bank acts as a banker to the government.

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Solution

Central Bank acts as a banker to the Government in the following cases:
 
a. It transacts all banking business of the Central Governments. It accepts money on account of the government and makes payment on behalf of the government.

b. It makes temporary advances to the government.

c. It makes extraordinary advances to the government during emergencies.

d. It manages public debt and is responsible for issue of new loans.

e. It advises the government to take measures to control inflation.
Concept: Central bank Function - Goverment Bank
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