Maharashtra State BoardHSC Commerce 12th Board Exam
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Give Reason Or Explain the Following. - Economics

Short Note

Give reason or explain the following.

Clearing house facility by central bank Economises the use of cash.

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Solution

The Central bank performs the function of clearing house. The cheques of two banks are cleared through their accounts with central bank. They avoid the transfer of cash. This reduces the requirement of cash reserves of the commercial banks.  Thus, Clearing house facility by central bank economises the use of cash.

Concept: Monetary Function of Central Bank
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