#economics #centralbank #functionsofcentralbank

• The Sole Issuer Of Banknotes And Coins

  • Sole rights is the legal right of a person to use something

  • The central bank has sole rights to issue legal tender in its own country, this is because the bank is allowed to control the countries banking system and monetary policy

• The Government's Bank

  • The central bank acts as a bank to the government, as normal bank does it for customers, the central banks does it for government, it deals with the money of government

  • The central banks do a lot of tasks for the government, it does many things like making a loan, getting money for the people who work at the government

• The Bankers Bank

  • The central bank acts as a bank for the other banks, This function includes overseeing the cash reserves of commercial banks

  • There is a proper rule that says every bank should have a account on the central bank of the nation

  • Central bank can handle transfer, big transfers and transfers from different companies

• The Lender Of Last Resort

  • Given that the authorities require all commercial banks to keep a certain percentage of their cash balances as deposits with the central bank, these cash reserves can be used by the country’s banking system during financial emergencies.

  • This function helps to build public confidence in the country’s banking system. For example, if a certain commercial bank faces temporary financial difficulties, it can, as a last resort, seek financial assistance from the central bank.

  • This helps to ensure the commercial bank does not collapse, protects jobs and safeguards the nation’s banking system and economic welfare.