Question

Explain with reasons whether you 'agree' or 'disagree' with the following statement:
Central bank is called as the bankers' bank.

Answer 1

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. It serves as the banker of the government and manages foreign exchange of the government.it is known as banker's bank. As it is a banker, agent and financial adviser to the bank. It manages the account of the other commercial banks, provide the banks with cash at the time of immediate cash crunch and it frames policies to regulate the money market.