Question

Define or Explain the following concepts.
Central Bank.

Answer 1

Central bank is an apex bank that controls and regulates the entire banking system of a country. It is the sole agency of note issuing and controls the supply of money in the economy. It is known as bank of bankers as it acts as a friend, philosopher and guide to all the commercial banks. It serves as the banker of the government and manages foreign exchange of the government. It is also known as lender of last resort as it lends money to both commercial banks as well as government at the time of liquidity crunch.