Question

State whether the following statements are True of False :
Credit money is created by the central bank of a country.

• 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. It serves as the banker of the government and manages foreign exchange of the government. Therefore, the main function of the central bank is to control of credit in the economy and not create it. It is the commercial bank that deals in the creation of credit in the economy.