General Functions of Central Bank

General Functions of Central Bank

General Functions of Central Bank

The function of the central bank is expanding day by day. Today’s central bank is doing more diversified tasks than that of past. Different person describe the functions of central bank is many ways being the leader of all banks and the guardian of the money market central bank have to do a multidimensional task.

General Functions

Generally, the central bank does vital functions now, general functions are given below:

Note Issue: Issuance of note is the main task of the central bank. What sum of money is needed for the purpose of trade and commerce is selected by the central bank and issue that sum of note for the purpose of uninterrupted circulation of money.

Maintaining the value of currency: Maintaining the value of the currency is mandatory for this type of bank. Without the stability of currency value, economic development would be stopped. Central banks maintain the currency value in comparison to other currency.

The direction of money Market: Money market is such a place where money is transacted, credited, capital is formed and speed-up the flow of money. A powerful money market ensures a powerful economy Central hanks are given this task to maintain and direct money market.

Credit control: Credit is needed for the purpose of trade and commerce. But credit flow is to be limited. Excess credit flow is not good, that creates inflation, devaluation of the currency etc.

Maintaining price stability: The price of daily necessities is very important for the standard of living. Central banks control the circulation of money in the market and thus maintain price stability.