Functions of a central bank

Q. Describes the main functions of a central bank.

The main functions of central bank are described below:

01. General Activities:

(a) Circulation & Issuance of Notes and Coins

(b) Credit Control / Inflation or Deflation Control

(c ) Stabilization of Local Currency Value in comparison to Foreign Currency

(d) Act as the bank of the Government

(e) Bank of the other Banks

 (f) Lender of last resort for other banks

(g) Act as Clearing House

(h) Foreign Exchange Control

(i) CAMELS rating of Commercial banks

02. Agency Functions:

(a) Advisor & delegate of the government 

(b) Guardian of the banks

(c ) Communication with other country's central banks

(d) Development of the banking sector

(e) Relationship with other international financial organizations (WB, IMF, ADB, IDB etc.)

03. Development Functions:

(a) Employment Generation

(b) Research of Economy and banking sector

(c ) Economic Development

04. Other Functions:

(a) Government Bond-Security Purchase and Selling

(b) Important Information Providing to Local and Foreign Queries

(c ) Changing of Mutilated Notes

(d) Establishment of Foreign Branches of Banks

(e) Fund transfer as per instruction of the government