Question

Central bank creates credit money.

• A. True
• B. False

Answer 1

The correct option is B False

False.

Central bank is an apex bank that controls the entire banking system of a country. It is the sole agency of note issuing and controls the supply of money in the economy by controlling the amount of credit creation in the economy. Therefore, the main function of central bank is to control the amount of credit and not to create it.