4 Major Functions of a Central Bank

Introduction

Central bank is the Head of the banking system of any country. Central Bank is also termed as the bank of bank or guardian of all the banks. This also called government's bank as well. Today in this article, we will discuss about the five major functions of a central in any country. The functions are explained as below:

1. Bank of the Banks:

Central Bank is regarded as the bank of the banks because the central bank is the only authority to direct other banks and financial institutions being operated within the border of the country. All the rules and regulations are directed by the central bank for the operation of day to day activities of the BFIs. The BFIs cannot take any action or decision against any directive or regulations implemented by the central bank of the country. They have to follow each and every directions to maintain financial discipline.

2. Government's Bank:

The central bank is also called the government's bank. All the financial transactions of the various government offices, ministries, departments and other concerned authorities are performed through Central bank of the same country. All the government authorities are not allowed to perform any financial transactions except through the Central bank.

3. Publishing Bank Notes and Coins:

The only authority which is allowed for publishing new bank notes or paper note and coins is the central bank of the that country. Other than the central bank, any individual or organization who are involved in publishing bank notes and coins are considered criminals or illegal. The central bank all checks over the distribution of fake notes and currencies in the market.

4. Monetary Policy:

The central banks are the only authorized institution for publishing the monetary policy. All the policy that are required for the control of monetary control of the country are made, published and implemented by the Central Bank of the country. The monetary policy helps to guide the whole economy of the country.