Question

Give Reasons or Explain the following:
As a banker to the government, the Central Bank transfers government funds.

Answer 1

Central bank is an apex bank that controls the entire banking system of a country and controls the supply of money in the economy through its various monetary policies. The Central bank is a banker, agent and financial adviser to the government. It manages the account of the government by transacting government funds, it buys and sells the securities of the government and maintains foreign reserves for the government.