Sunday, June 9, 2013

Function of central bank

The function of central bank is given below
1)    Monopoly of notes issue
2)    Government bank
3)    Bankers bank
4)    Lender of the last resort
5)    Clearing house function
6)    Control of credit
7)    Development function

Monopoly of notes issue
                 The central bank is given the monopoly right to issue the note in every country. Central bank issues all together 11 types of notes.
At present, central bank issues coin also. The notes are issues against the fixed %reserve of gold, silver and foreign currency so as to check the over issues of paper money.

Government bank
              The central bank works as the banker, agent and advisor of the government. The bank provides banking services to the government as the services provided by commercial bank people. The bank maintains government account.

Banker of bank
            The central bank works as the banker of other banks. The rights of supervision, control on other banks for the sound development of the banking system in the country lies with central bank. The commercial bank have account in central bank.

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