State five differences between the Central Bank and a Commercial Bank.

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Solution

Points of difference

Central Bank

Commercial Bank

Power

Power to regulate money supply. Therefore, known as regulator.

Power to facilitate the changes. Therefore, known as facilator.

Motive

Main motive is the welfare of the economy.

Main motive is profit maximization.

Authority

Authority to issue currency of all denominations including notes and coins.

Authority to issue only one unit coin and note.

Lender

Central banks lends to commercial banks and government.

Commercial banks only lends to the public.

Credit creation

They have the power to increase or decrease the amount of credit creation.

They have the power of credit creation.

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Similar questions

State any three points of distinction between the Central Bank and Commercial Banks.

The central bank controls credit but commercial banks create credit. State true or false.

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Points of difference	Central Bank	Commercial Bank
Power	Power to regulate money supply. Therefore, known as regulator.	Power to facilitate the changes. Therefore, known as facilator.
Motive	Main motive is the welfare of the economy.	Main motive is profit maximization.
Authority	Authority to issue currency of all denominations including notes and coins.	Authority to issue only one unit coin and note.
Lender	Central banks lends to commercial banks and government.	Commercial banks only lends to the public.
Credit creation	They have the power to increase or decrease the amount of credit creation.	They have the power of credit creation.