Central Bank

definition

A central bank, reserve bank, national bank, or monetary authority is an institution that manages the monetary policy of a country or monetary union.

main financial institution

A Central Bank is the main financial institution of a country that controls the:

supply of money, credit, and interest rates, and supervises the banking system.

issuing currency

The central bank has the sole authority to issue the nation’s currency, which ensures uniformity and prevents counterfeiting.

formulating monetary policy

It controls inflation, stabilizes prices, and manages interest rates by adjusting money supply and credit conditions.

Using monetary tools.

lender of last resort

When banks face temporary liquidity shortages or systemic stress, the central bank supplies emergency liquidity to them.

regulatory

The central bank supervises commercial banks and other deposit-taking institutions, sets rules, conducts inspections, and enforces laws to protect depositors

maintaining economic stability

By controlling inflation, unemployment, and exchange rates, it creates a stable economic environment.

foreign exchange management

Central banks manage official foreign-exchange reserves, intervene (when appropriate) to smooth exchange-rates, and help the country meet external payment obligations.

bank of government 

A central bank acts as a banker of government. The govt. makes deposit with the central bank.

It provides loan to government for different developing purpose.

It makes payments on the behalf of the government.