Question

State with reasons whether you agree or disagree with the following statements.
Central bank does not work as a banker for the government.

Answer 1

No, I do not agree with this statement.

Central bank, everywhere, performs the functions of banker, agent and adviser to the government.

As banker to the government, it makes and receives payments on behalf of the government. It advances short-term loans to the government to tide over difficulties. It floats public loans and manages the public debts on behalf of the government. It keeps the banking accounts and balances of the government after making disbursements and remittances.