Central bank functions-custodian of member cash reserves , Managerial Economics

Custodian of Member Banks Cash Reserves

As bankers bank the central bank performs several function. It keeps the cash reserves of commercial banks in the economy and thus acts as custodian of the ultimate reserves of the country which support its credit and banking system. The other banks keep their deposits with the central bank. The central bank discounts the bills of commercial banks making them available credit based on the ultimate reserves. It provides able and effective leadership to the banking system in the country. Other banks look it for guidance and direction a shaping their polices in accordance with its directions it effects centralisation of cash reserves of members banks in the country. The centralisation of cash reserves in the central bank is a source of great strength to the banking system of any country. Centralised cash reserves can at least serve as the basis of a larger and more elastic credit structure than if the same amount were scattered among the individual banks it is obvious that when bank reserves are polled in one institution which is moreover charged with the responsibility of safeguarding the national economic interest such reserves can be employment to the fullest extent possible and in the most effective manner during periods of seasonal strain and in financial crises or general emergencies.

Posted Date: 12/1/2012 6:49:17 AM | Location : United States







Related Discussions:- Central bank functions-custodian of member cash reserves , Assignment Help, Ask Question on Central bank functions-custodian of member cash reserves , Get Answer, Expert's Help, Central bank functions-custodian of member cash reserves Discussions

Write discussion on Central bank functions-custodian of member cash reserves
Your posts are moderated
Related Questions
Is Indian companies running a risk by not giving attention to cost cutting?n..

The variance of the OLS estimator is VAR( ^B)=σ 2 /ns 2 x , where   s 2 x =£x 2 /x You're hired to estimate   and you're going to be paid according to the accuracy of your esti

Fall in Supply When the supply falls, the supply curve shifts to the left to position S 1 S 1 .  At the initial equilibrium price P 1 , quantity supplied falls from q 1

1. The price of a CD (PC) is $10 and the price of a DVD (PD) is $20. Philip has his income (M) of $100 to spend on the two goods. Consider three consumption bundles: (C, D) = (2, 3


Long-Term Policies One long term option of tackling balance of payments deficit is export promotion .  In the long run this is the best method of improving a balance of payme

Economics has two major branches: (1) micro economics, and (2) both micro and macro economics theories. The parts of micro and macro economics that constitute managerial economics

An Economy consists of two regions, the North & the South. The short-run elasticity of labor demand in every region is -0.5. Labor supply is perfectly inelastic within both regions


Economics for Accountants A few teachers and some students have questioned the rationale for including economics in a course of study for professional accountants. In order to