Question

State with reasons whether you agree or disagree with the following statements.
Credit Control is the function of Central Bank of the country.

Answer 1

Yes, I do agree with this statement.

The control or adjustment of credit of commercial banks by the central bank is its most important function.

Commercial banks create lot of credit which sometimes results in inflation. The expansion or contraction of currency and credit is the most important causes of business fluctuations. The need for credit control arises from the fact that money and credit play an important role in determining the level of incomes, output and employment.

Thus, the control which the central bank exercises over commercial banks as regards their deposits, is called controller of credit.