Question

State with reasons, whether you 'agree' or 'disagree' with the following statement.
Central bank has the sole power of issuing currency notes.

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.

Central bank has monopoly rights of issuing notes. This is called currency authority function of central banks. All notes issued by central bank are an unlimited legal tender in the country.