Imparlance of Central Bank

Nowevery country has a central bank. It a symbol of financial sover eignty and stability of the country. A central bank is an institution \ ‘hich is responsible for safeguarding the financial stability of the country, It holds the ultimate reserves of the nation, controls the flow of purchasing power -whcthcr currency or credit-and acts as a banker to the State.

In recent years, the importance of central banks has enormously increased. This has been Jue to various causes; the growing interdependence of economic life within and between countries: the greater necessity of management and control of currency system; he post-war (1914-1 ) confusion- in currency and exchange matters; the Great Depression and realisation that control over supply of money through central banks could avoid to a large degree cyclical fluctuations; and the clement of planning and regulation that has been introduced ill the economic systems of vaious countries in recent years, All these have increased the importance of an institution which could co-ordinate, control and manage the various complicated and conflicting factors, economic and financial, which affect the economic stability in the national and international fit.