Central bank, Managerial Economics


A modern central bank performs so many functions of different nature that it is difficult to give any brief yet accurate definition of a central bank. Any definition of a central bank is derived from its functions and these functions have varied from time to time and from country to country. Like the topsides, the functions of central banks gave grown over time making it more difficult to give any brief and unchanging definition of a central bank. Nevertheless, a central bank may be defined as that central monetary institution which is charged with performing the duties of bankers bank fiscal agent for the government and managing the monetary system of the country. It must also be stated that. Barring rare exceptions. A central bank should not conduct commercial banking business. Economists have defined central bank differently, emphasising its one function or the other. According to Vera Smith the primary definition of central banking is a banking system in which a single bank has either complete or a residuary monopoly of note issue in Shaw opinion, the central bank is a bank which controls credit. Thus the one true,but at the same time all sufficing function of a central bank is control of credit. According to Hawtrey, central bank is the lender of last resort. According to the statutes of the bank for international settlements, a central bank is the bank in any country to which has been entrusted the duty of regulating the volume of currency and credit in the country. According to Kisch and Elkin, a central bank is a bank whose essential duty is to maintain. Stability of the monetary standard. In short while Vera Smith definition stresses the note issue function of the central bank the definitions of Shaw Hawtrey bank for international settlements and Kisch and Elkin emphasise the credit control. Lender of the last resort. Regulation of currency and credit and maintenance of stability of the value of the money unit functions of the central bank.

Posted Date: 12/1/2012 5:37:31 AM | Location : United States

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